What Does The White House Say About Unemployment?

Bloomberg news reported that White house aides suggest that unemployment will remain high for an extended period of time. Their budget forecast is an average of 10% throughout 2010. I also heard that these projections are for the next three years – although I only verbally heard that comment on the radio.

What do I think?

My concern is that if the White House, who claims to be laser focused on jobs, has given up and assumes no change in the employment picture, then we may have at bigger issue. At best case, based upon the typical cheerful political projections, we are looking around 10% on a sustained basis. At worst case, particularly since our national debt and tax picture continues to deteriorate, we are looking at the potential for a much higher number.

But wait! What is the “real” unemployment number? Fox news has suggested that it is currently around 17%. Actually, these numbers are estimates based upon many assumptions. However, even the New York Times admits that there are pools of people beyond the “reported” unemployment number who include those under employed (taking a lower level job just to get money in the door) or who have given up hope and who may return to an active job search later.

So, what is the real number? My guess is that we are somewhere between 17-23% depending upon who you talk to; so I am suggesting that 20% is a fair number to work with. That does not mean that the real number may not be lower or higher from month to month. That is not the issue.

The issue is:

• If 17%, that means 1 out of every 6 people is unemployed or underemployed.
• If 20%, that means 1 out of every 5 people is unemployed or underemployed
• If the White House suggests an “extended period of high unemployment”, then we have a no short term reason to expect otherwise
• If our national debt and taxes continue to go up, the forecast will only get worse. Why? Higher cost of debt reduces capital needed to grow businesses. Higher taxes reduces consumption needed to grow businesses. No business growth leads to more work force reductions.

What do you think?

Next week, I will tell you why I think this Spring is a ray of sunshine!