Greenspan: Unemployment will be decrease - by next Christmas

The nation’s continuing negative economic environment will be the topic of discussion on Monday when President Obama meets with executives with 12 banks to discuss his proposals to boost small business lending.

Presumably, those execs are some of the same "fat cat bankers" that POTUS mentioned during his conversation with CBS' 60 Minutes last night.  Obama said of those bankers,

“They don’t get it. They’re still puzzled why is it that people are mad at the banks. Well, let’s see. You guys are drawing down ten million, twenty million dollar bonuses after America went through the worst economic year that it’s gone through in decades, and you guys caused the problem.”

Meanwhile, the unemployment rate and how to ameliorate it was the focus of discussion during NBC’s Meet The Press yesterday, which featured a roundtable including former Federal Reserve Chairman Alan Greenspan, who was asked one of the questions du jour on Sunday Morning talk- that is, whether the recession was over.

Greenspan said that he'll leave it to the economists to ultimately give a definitively answer to that, but that he believed the economy bottomed out sometime this past summer, but “we still have a long way to go back” to where the economy was before 2007, when the subprime mortgage crises began the downward spiral.

"Stretch" (George W. Bush's monikor for the MTP host) then asked the by far more pressing question: When will the unemployment rate, currently at 10%, begin to drop?

Greenspan suggested that unemployment will come down quickly, but said that won’t be reflected in the unemployment rolls.  Why is that?  He said that with 38% of those being on unemployment for over 27 weeks , and many for over a year, he worried that some of those workers will begin their losing skills, and thus when they return , they and thus the economy overall won’t be as productive.

When asked specifically when unemployment will drop below 10%, the man labeled "the maestro" (before George LaMieux took that appellation and before Greenspan's own reputation took a hit) said this:

Well, first of all, the reason that we're looking at such a difference is that in the current period, it's very apparent to me that business got very frightened when the crisis occurred and presumed that the economy was going to go down far more sharply than it actually did.  Indeed, I think Dr. Romer was making much the same point.  What this means is that we have a level of—a level of employment at this stage which is barely adequate to staff the level of output, and that it seems to me virtually inevitable, if nothing else were to happen, that employment would start to come back fairly quickly.  That's not the same thing as saying that the unemployment rate is coming down, for two reasons.  One, it takes 100,000 a month of employment increase just to stay even.  But in addition, as Dr. Romer pointed out, as the economy improves, you're going to get a number of people who are not seeking jobs, meaning they're not in the labor force, who will now start to come back, and that will make the hurdle as to bringing the unemployment rate down quite difficult.

Also on the program were Michigan Governor Jennifer Granholm, who presides over a region with one of the country's worst economies, former Massachusetts Governor and GOP (once and future) presidential candidate Mitt Romney, and CNBC host Jim Cramer.

Granholm has become experienced at talking about the economy, and defending President Obama's plans to address the crisis, which is what happens in part when you're a Democrat and you  govern the state with a 15% unemployment rate.  The sister-in-law of Tampa City Councilwoman Mary Mulhern, Granholm had the president's back again, praising the White House for its role in helping the troubled auto industry and creating an environment that allowed GM to pursue production of the Chevy Volt.

Starring in the role of the partisan critic of the President's economic policies was Romney, one of the few potential 2012 GOP contenders who doesn't have a book out (his tome will be published in March).    Of the stimulus plan , Romney called it a failure.

On a really depressing note regarding unepmloyment, check out Justin Fox's column in the current TIME.

He writes about how the Labor Department calculates the unemployment rate, and cites other factors that dictate how many people are out there that really want to work.  He says by one calculation, the unemployment rate is the worst since the Bureau of Labor Statistics began such reports:

Such measures still rely on people's own assessment of whether they want to work. A BLS study a decade ago found that these self-assessments aren't all that reliable. So how about the simplest possible job-market measure, the employment-to-population ratio? Among Americans ages 25 to 54, it was at 75.1% in November, down from 80.3% in early 2007 and — with the exception of October's 75% — the lowest it's been since 1984. Because of the entry of women into the workforce, the ratio trended upward from the 1960s through the 1990s. If you look just at men ages 25 to 54, the picture is much more dire. Their employment-to-population ratio of 80.6% in November is the lowest since the BLS began keeping track in 1948. It's 4 percentage points lower than it was in the depths of the early-1980s downturn.

Meanwhile, back on MTP, Christina Romer, the head of the White House Council of Economic Advisors, said she didn't think the recession was quite over, while Larry Summers on ABC's This Week said he thought it was.  Some political coverage today is trying to make an issue over the fact that the economic team isn't on the same page, but obviously, both could be correct, getting back to Greenspan's statement.  Whether the recession is officially over really means nothing on Main Street, hence the discussion about unemployment and Obama's meeting with banking officials today.

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