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U.S. Structural Unemployment Rate Stuck at Record High

December 6th, 2010

The latest U.S. official employment data states that fewer than 40,000 new jobs were created in November, well below the level required to cover new entries into the workforce due to natural population growth. Officially, the U.S. unemployment rate stands at 9.8%, though factoring in discouraged workers and part-time employees unable to find full-time work, the actual figure hovers near 20 percent. More alarmingly, long-term unemployment in America stands at the highest level since the Great Depression of the 1930s.

Despite the dismal employment numbers, there remains among economic commentators in the United States eternal optimists who believe there are still “green shoots” pointing to an economic recovery. Some even maintain that the actual job creation numbers for November are much higher than the official numbers, despite much more voluminous contrary evidence.

In contrast with the optimists, the Federal Reserve Chairman, Ben Bernanke, is already hinting at the need for a third round of quantitative easing, after his recent unleashing of QE2, a $600 billion orgy of money-printing by the Fed. Bernanke knows that the employment situation in the U.S. is a catastrophe, meaning there can be no consumer-led recovery of the economy, that at a time when the Obama stimulus money is running out. With a second stimulus program off the table now that the Republicans have taken control of the House of Representatives, the Federal Reserve sees itself as the only avenue for stimulus in a desperate drive to revive job creation in America. However, to think that monetary policy can be more effective than fiscal policy in facilitating job creation seems like the last great gasp of an incorrigible fool.

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