Sunday, November 29, 2009

Fix the uncertainty

David Ignatius has a depressing column about the unemployment picture for the next few years. It's not a pretty picture.
Putting the numbers together, the Fed predicts that despite a growing economy, unemployment will be 8.2 to 8.6 percent during 2011, down only about a percentage point from 2010. And here's the scariest line of all in the Fed minutes: "Most participants anticipated that about five or six years would be needed for the economy to converge fully to a longer-run path" and a normal job market.
Five or six years until we get back to a normal job market? Add in the lower revenues that such a gloomy prediction entails and you can see that there is no way that individual state governments or the federal government will have the money for all that they have been trying to do. Spending will have to decrease. The money just isn't there and there is no hope of it being there any time soon.

Ignatius quotes from a report from the Federal Reserve on the overall jobs picture and the Fed's answer to the question of why unemployment remains so high despite all the signs that the recession is either ending or already over.
The Fed's answer is that businesses, having been burned by the recession, are wary about adding more workers or making new investments. Like consumers who have just discovered the virtues of saving, their prudence -- however sensible on an individual basis -- is a collective drag on the economy.

"Business contacts reported that they would be cautious in their hiring," the Fed minutes note. "Indeed, participants expected that businesses would be able to meet any increases in demand in the near term by raising their employees' hours and boosting productivity, thus delaying the need to add to their payrolls."
Well, in this environment, wouldn't you be cautious about hiring? You don't know what the tax burden will be for your business. You don't know what health care requirements you will be taking on with each new hire. You don't know what regulations will be imposed by Democrats efforts to pass something like the cap and trade bill. They don't know what the value of the dollar is going to be. And of course you don't what demand will be if those gloomy unemployment numbers continue for five or six more years. Many smart businessmen will decide that it is better to sit back and wait for the situation to clarify. As government should be doing, they'll try to do more with less.

If the Democrats want to goose hiring, they should think about what they can do to reduce that uncertainty. Business is uncertain enough without the added questions that so much of the Democratic agenda in taxes, regulation, health care, and environmental laws have imposed on businesses. What the Democrats seem so clueless about is how their very agenda is contributing to the uncertainty businesses face. Until they tone that down, the unemployment picture will remain a very gloomy one.

4 comments:

Richard said...

We assume they want to increase employment and end this recession/depression. If their real goal was to bring about economic collapse how could they do any better than their present course. They aren't "clueless" at all. They won't waste an economic emergency but will usher us into Global Governance as the only solution for a desperate populace.

Erica said...

Who would like to see Obama legally ousted before 2012? Yes, it can be done, and these graphics illustrate the process. If you know anyone who qualifies as an “interested” or “third” person as described in the graphics, please share this information.

3 Graphics: Quo Warranto Process to Remove Obama
http://jeffersonsrebels.blogspot.com/2009/11/quo-warranto-to-remove-obama.html

Bachbone said...

There's a greater chance of Earth colliding with Pluto than Obama being removed by the process your link describes, Erica. No court of competent jurisdiction is going down that road.

Liberals always blame the failure of their programs on, 1) not spending enough money and/or 2) not spending enough money for a long enough time. And until recently, it was 'penny pinching' Republicans who got in the way of doing both. Unless voters regain their fiscal sensibilities and reign in both parties, the country is in very deep trouble for decades.

equitus said...

I'd expect the loonier lefties that post here would blame greedy unpatriotic businessmen/corporations who won't hire in order to protect their huge profits. Right, BB?