Goldman Sachs: 8.8% Headline Unemployment By Year End 2012
Everyone in the forecasting business is scrambling to mark down both their estimates of second-quarter growth and their forecasts for later in the year. Goldman Sachs (no link) was pretty optimistic a few months ago; now they’ve grown quite pessimistic[. . . .] At this point, GS is predicting an unemployment rate of 8 3/4 percent at the end of 2012 — five years after the Great Recession began.
The New Normal:
So, terrible growth prospects; low inflation; oh, and low interest rates, with no sign of the bond vigilantes. Ordinary macroeconomic analysis tells you very clearly what we should be doing: fiscal expansion and monetary expansion by any means we can manage[. . .] And what are we talking about in policy terms? Spending cuts and an end to monetary expansion.
I am supporting President Obama for reelection because the alternative is worse. But there is an argument to be made that it is a terrible precedent for a President to win reelection with terrible economic policies that treat 9% unemployment as the New Normal.
Speaking for me only
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