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Question: Will the unemployment rate get worse?

Dean Baker: I’d be very surprised if we’re not looking at an unemployment rate over 10% by the end of the year and quite likely crossing 11% sometime next year. In a good case scenario, we’ll start to see the unemployment rate coming down in 2010 but it’s still likely to be in double digits by the end of 2010. But that’s what is really front and center. Now, how long does it take us to get back to a more normal unemployment rate? That’s going to depend a huge amount on policy. I think we very badly need another stimulus, probably even larger than the last round. At this point, there’s little political will in Congress and certainly in the Obama administration to take the lead on that. But my hope is that as the economy continues to deteriorate—I don’t hope that it continues to deteriorate but I think it will; there are no two ways about it—you will see more pressure on Congress to do something about it so that by the summer you do have people talking about another round of stimulus. So if that happens, we do get a big boost to the economy. Then, the economy could start to recover more quickly. And perhaps next year we will see the unemployment rate under 10% by the end of 2010.

Recorded on: April 28, 2009

More from the Big Idea for Wednesday, August 10 2011


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