One of the biggest concerns at the Federal Reserve and within the Obama administration is the spike in long-term unemployment, which is at its highest levels in the post-second world war period. And there is a vigorous debate over what tools policymakers can and should use to fight it.
Today, the Treasury department issued a potentially encouraging report on the HIRE act, a new law passed in March which gives a payroll tax exemption to companies hiring workers who have been unemployed for more than two months.
Alan Krueger, chief economist at the Treasury, said that his research, based on the labor department’s current population survey, found that from February through May about 4.5m hires were eligible for the tax break, which is undoubtedly an impressive figure. But is there a catch?
One of the largest – and often unspoken – restraints on the US recovery in this cycle has been the failure of small businesses to start cranking out more output and employment, partly because of sluggish demand for their products, but also because of a lack of available credit.
Ben Bernanke, Federal Reserve chairman, took on this issue this morning in a speech that essentially raps the banks on the knuckles for not being more lenient with small businesses.
“Our message is clear: consistent with maintaining appropriately prudent standards, lenders should do all they can to meet the needs of creditworthy borrowers. Doing so is good for the borrower, good for the lender and good for our economy,” Mr Bernanke said.
The annual revisions to national income data, just published, show the economy was worse than thought over the past 3 years, primarily because the economy was slowing earlier in 2007 and 2008 than previous data showed. In total as the chart shows, the level of national income is about 0.4 per cent lower now than we thought.
The peak of gross domestic product was lower by 0.3 per cent even if the recession was no deeper than we thought – the economy did not grow as much before the recession struck but still plunged as far as we thought.
The main driver of the downward revision is lower household expenditure. People bought far fewer fridges and other white goods than the statisticians previously thought. The consequence of
There are worries that a €11.5bn loan from the Irish central bank won’t be repaid, after it was discovered the loans were secured against Anglo’s loans to property developers. The Irish Independent reports:
Fresh doubts have emerged about the taxpayers’ final bill for bailing out Anglo Irish Bank after the Department of Finance admitted an €11.5bn loan given to the bank is secured on highly risky property loans. The Government has already earmarked €22bn for the nationalised bank, but if the €11.5bn loan remains unpaid it would bring the total bill to €33.5bn.