This has been brewing for a while – but I doubt any politician will be brave enough to point it out.  Unemployment is much much lower than you would expect given the depth of this recession.  Now, like Chris, you may wonder if there is a lot of hidden unemployment, but even on his figures, the ‘discouraged’ workers are back at levels of March 97 – which was a growth year, the fifth in a row.   Basically, employment figures are back where they were when Labour came to power  – it could be much worse.

And no doubt will be, when the public sector cull gets underway.

The debate about QE and interest rates policy is definitely hotting up.  Ambrose Evans-Pritchard on how it hurts German insurance companies. Duncan’s solution – using the money for a National Investment Company.  A man called Cheeseman agrees with Duncan that the effect it has had on the economy is not what it says on the tin –  ‘boosting spending’.  The Bank are now very bullish – or is that just Paul Fisher interviewed in the FT (they all sound so different on this one).  And anyone with a brain ought to realise the foolishness of David Cameron’s dogmatic position.Nils Pratley asks if Mervyn will slap him down.   Whose independence is being threatened, exactly? The Bank’s to operate monetary policy – or the Government’s to use fiscal policy?

Krishna Gua is not the first to ask why the FOMC is sounding hawkish when we are clearly a long way from hitting economic capacity in the States. And I want to ask how much of the enormous profits of Goldman Sachs come directly from this policy.

If what we need is more monetary looseness, I’m not encouraged by the news that the MPC is visiting Scotland.   Sell stocks, now.

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3 thoughts on “Unemployment the good news side of this recession

  1. Larry Elliot today:

    There is the outline of a political narrative here, which goes something like this: we, the government, had to step in to rescue the banks last autumn. The impact of the near-death experience had such profound global ramifications that it was impossible to prevent jobs being shed in large numbers last winter, but things have started to stabilise since then. There are two reasons for that – expansionary policies from the Treasury and the Bank of England coupled with a labour market that is a lot more flexible than it was during previous periods of retrenchment.

    It’s not a perfect argument, but it is at least a defensible position for Brown over the months ahead.

    http://www.guardian.co.uk/commentisfree/2009/oct/14/recession-jobs-growth-economic-policy

  2. Have you considered that the factors below my be part of the explanation for the relatively slow increase in unemployment?
    1. There are a lot of loss making firms out there who owe the tax man plenty. HMRC has been amazingly tolerant. As soon as they move in, those firms will be liquidated.
    2. Banks seem more willing to help the entreprenneurs from those liquidated firms to ‘start again’. Besides owing to the taxman, no doubt they owe lots to their bank – by continuing to back those guys, are banks thinking they are more likely to get their money back via their next venture?
    3. Firms have bought the idea that they need to have as much of their exisiting ‘people’ in place for when they emerge into the sunlit uplands – and then as there is greater leeway provided by HMRC and their banks … so I am not surprised that unemployment is lagging more than one might expect.
    B

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