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World 29/World 08
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World Industrial Production
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Fed forecast of the unemployment rate
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Civilian Employment-Population Ratio
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Some perspective
• EPI: U.S. needs to add 127,000 jobs a month to keep up with population growth
• Pre-crisis unemployment within two years add 580,000 jobs per month
• Five years300,000 per month
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Annual averages of monthly job gains going back to Clinton
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Divergence
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Structural Shift? (Or: who’s unemployed? Everyone.)
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Weak Recovery
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Okun’s Law
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Okun’s Law• The horizontal axis shows annual growth rates of real GDP;
the vertical axis shows the year-to-year change in the unemployment rate.
• First, the economy has to grow around 2 1/2 percent per year just to keep unemployment from rising.
• Second, growth above that level leads to a less than one-for-one fall in unemployment (because hours per worker rise, more people enter the work force, etc.).
• Roughly, it takes two point-years of extra growth to reduce the unemployment rate by one point.
• Suppose that from here on out the U.S. averages 4.5 percent growth. Unemployment would be close to 8 percent at the end of 20126 percent by 2014.
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Recession Comparison
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European Unemployment
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European Unemployment
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LTU
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The Baltic Disaster/Miracle
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Business investment, U.S.
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Global Unemployment (01/11)