World 29/World 08

World Industrial Production

Fed forecast of the unemployment rate

Civilian Employment-Population Ratio

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

Annual averages of monthly job gains going back to Clinton

Divergence

Structural Shift? (Or: who’s unemployed? Everyone.)

Weak Recovery

Okun’s Law

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.

Recession Comparison

European Unemployment

European Unemployment

LTU

The Baltic Disaster/Miracle

Business investment, U.S.

Global Unemployment (01/11)