The Economic Recovery “Clearly Has a Long Way to Go”
Fed Governor Sarah Bloom Raskin gave a speech in Los Angeles recently. Her tone and the content of her comments show she is even more pessimistic about the rate of U.S. recovery than her boss Ben Bernanke is. And her…
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At the core of her statement was this observation:
However, the national economic recovery clearly has a long way to go. The share of unemployed workers who have been without a job for more than six months is still more than 40 percent nationwide, a level well above that seen in earlier recessions. Being unemployed for such a long time can have negative effects on workers’ skills and their attachment to the labor force, thereby possibly reducing the productive capacity of our economy.
Raskin echos comments that others have been made, but the fact that she makes them this “late” in what is presumed to be a modest recovery should prompt people who believe the recovery is strong to pause and take notice.
Raskin places the cause for the recession, and what she sees as a remarkably long recovery, at the feet of those that most pessimistic economists do. Home value erosion robbed people of their primary asset at a time when their borrowing was at record highs. Employers who had little access to capital and poor sales laid off workers in great numbers. The real estate and leverage cycle became vicious, and it has still not ended.
If Raskin is right, the new normal that many policy makers have described may not be in place at all. Perhaps homeowners have not come to terms with the reality they cannot use their houses to educate their children and build nest eggs for retirement. Perhaps businesses believe the recovery is halting or spotty and that they can do without new workers by squeezing more productivity out of their existing ones.
If Raskin is right, the time to a recovery, at least to prerecession levels, may not be measured in quarters. It may have to be measured in years.
Douglas A. McIntyre
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.