FINANCIAL TIMES Opinion: By Joseph Stiglitz …Let’s assume that job creation continues at the rate of 225,000 jobs a month. That is only about 100,000 beyond the number required to provide jobs for the average monthly number of new entrants into the labour force. At that pace, it would take 150 months to reach full employment – 13 years, some time around 2025. The independent Congressional Budget Office is more optimistic, forecasting the return of full employment by 2018…
The pre-crisis bubble masked fundamental problems with the US economy. Low-income households spend a higher fraction of their budgets on consumption than richer households. Therefore, the redistribution towards the top – with the top 1 per cent getting more than a fifth of the nation’s income – would have led to weak aggregate demand in the absence of the bubble…
Today the American economy faces three big risks. First, a steeper European downturn, as a result of the excessive austerity and the euro crisis. Second, complacency that the economy will recover quickly without government support. Though every downturn comes to an end, that should not be of much comfort. Third, that we accept that an unemployment rate above 7 per cent is inevitable…. (more)
