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Fed Downgrades Recovery Expectations While Congress Enters Gridlock Mode

November 24, 2010 - by Donny Shaw

The Federal Reserve has lowered the expectations for economic growth and is not expecting any significant change in the unemployment rate for the next couple of years:

Unemployment is set to remain higher for longer than previously thought, according to new projections from the Federal Reserve that would mean more than 10 million Americans remain jobless through the 2012 elections – even as a separate report shows corporate profits reaching their highest levels ever.

Top Federal Reserve officials project that the unemployment rate, now 9.6 percent, will fall only to about 9 percent at the end of 2011 and about 8 percent when the next presidential election arrives, in late 2012. The central bankers had envisioned a more rapid decline in joblessness in their previous forecasts, prepared in June.

Amazingly, there is no congressional response to the extended unemployment crisis in the works, and in fact it looks as if Congress is on the verge of ending what limited unemployment assistance they have in place currently.

On November 30th, insurance benefits for the long-terms unemployed will expire because of congressional gridlock, and even if Congress does eventually find a way to extend them, it will probably be for only three months. That would keep the program alive just until the Republicans, who have routinely tried to block the Democrats from extending benefits in the past, will be in control of the House and yield more influence in the Senate.

As the Fed projections reconfirm, the job market is in a long-term contraction (4+ years above 8% unemployment), which means that millions of people are being squeezed out the workforce with no chance of being reabsorbed. Based on the facts, one might expect Congress to be looking at something like S.3706, which would let unemployed people collect insurance benefits for a longer period, or some other approach to help the people who are most in need. But they’re not, and homelessness, hunger and suicide rates across the country are rising as a result.

Most of the commentary today on the new Fed projections is about what the unemployment crisis means for Obama’s re-election chances in 2012. But, the fact is, Obama, Congress and most of the people writing about the politics of this will be fine. Let’s consider what this means for the people who are suffering and start getting serious about a national response.

Photo by iheartfishtown used under a CC license.

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Comments

  • seanurse 11/24/2010 8:21am

    wow donny I was hoping you were going to print the miracle we so badly need. I just came back from court. I have till the 15 of december to get moved or paid with my landlord.I did enjoy the judge telling her not to file claims in his office till 60 days late from now on. I’m only late this month. well forget x mas for me and foget my b day on the third too, god i wish things would get better in congress. please give them a heart when they return. here’s praying for a big miracle for our country.

  • n0bama4me2010 11/24/2010 8:23am

    we got nothing to lose since this president and democrat majority failed and ignored us all this year. we can only hope that with the new congress of more conservatives we will address the real issue of job creation/promotional policies, tax cuts, end wasteful spending, and illegal immigration which will get us back on track, working again, and not relying on unemployment checks especially when we get ignored like this.

  • beenblue 11/24/2010 9:26am

    Just a thought : I guess common sense, is not so common as we thought!
    Lets say there are 10 mil. unemployed, well that`s 10 mil. tax payers considered lost revenue as income tax the government is loosing per person. Yet the currant agenda is to extend the tax credit to the wealthy, while at the same time act as the worlds police force, expanding perpetual war for perpetual peace. We are no longer a credit nation we are a debtor nation, and we can no longer afford to have two thirds of the governments revenue go to “Defense.” The Pentagon is like a black hole: what goes in is forever lost to us, and no new wealth is created. When we lost our economic empire, we became a military empire, but we have not won a war since WW2, the only winners are the banks and the industrial military machine that has no end in creating enemies for us. The path we are taking broke Russia, as they spent all their income on the military build up, and tried to expand, they went bankrupt and left Afghanistan.

  • Comm_reply
    timothylange 11/24/2010 7:17pm

    It’s the Republicans that have not wanted the extensions. The Democrats have been the ones there for us unemployed people. As far as i’m concerned, both parties suck. We need the ACP (http://americancentristparty.net/index.html).

  • beenblue 11/24/2010 11:10am

    The picture attached to this post by Donny truly angers me, for all the right reasons, why ?, THIS IS AMERICA, thats why ! Our country has been hijacked by special interest foreign and domestic, congress and its lobbyists, banks and corporations that control the media and news print. And for all you patriots who tear up at the sight of the flag, it`s made in Taiwan. The reason for our garrison state is obvious: profit. A state forever at war, hot or cold, is easily controlled by the few. I quote Henry Adams in 1910 he wrote:“The whole fabric of society will go to wrack if we really lay hands of reform on our rotten institutions.” Then he added, “From top to bottom the whole system is a fraud, all of us know it, laborers and capitalists alike.” Today words are used to disguise, not illuminate action, words must be twisted as to justify an empire that has now ceased to exist, much less make any sense, so as to maintain a 50 year arms race and the necessary fearsome enemy at our gates.

  • beenblue 11/24/2010 12:05pm

    One last thing, the government is not stupid it learned in the 60s & early 70s when the people wanted an end to the Viet Nam war, we were one voice, and we were everywhere, we were on TV, magazines, newspapers, songs on the radio and the street corner, and we protested from city hall to capital hill. Now the government has us fighting amongst ourselves. It`s like a magician, you watch one hand while the other picks your pocket. Were not the problem were the solution to the problem. If we realize Washington needs an enema, and we come together, we might stand a chance. This is what the few who control us truly fear,“THE MASSES.”

  • Comm_reply
    LucasFoxx 11/29/2010 6:17pm

    The problem is you can’t get on TV, magazines, newspapers, songs on the radio. It is all corporate owned and operated, and content is selected by a much smaller pool of people. Dancing With The Stars, and other “Reality” shows are covered in great detail, while the reality of the economy and unemployment is only dished out as talking points or electoral pabulum. It’s boring and doesn’t sell advertising. They quote outrageous pundits who are out of office, and not in the game, and the assumption is they are covering government. Good luck to us all.

  • DeborahJBrown 11/24/2010 2:32pm

    There is no better way to show that you do not care about someone/something than to ignore them. Congress has been ignoring the unemployed and jobless situation for a very long time. Unemployed workers are becoming increasingly distressed due to years of empty promises to restore jobs. At the same time our government has depicted unemployed workers as lazy. This is a gross distortion with the potential for very bad consequences. People are becoming desperate – especially those ignored the longest-99ers. Members of Congress act as if they believe they are too far removed from the problem to be affected. They’re wrong, but still they took recess without dealing with the unemployment issue. They’ll be sitting around a Thanksgiving table stuffing their gullets without a care for all the children who will go without.GREED and SELFISHNESS are ugly things. If Congress continues to do nothing to help the millions of unemployed workers, especially the 99ers,they will surely reap what they sow.

  • beenblue 11/25/2010 6:34am

    Well it`s Thanksgiving, and I want to wish all of you a good day, and I hope you all have something to be thankful for, even if you have to look real hard, or not at all.

    Sincerely, Beenblue

  • ryandsmith 11/25/2010 7:07am

    So the banksters are getting closer to admitting that they have bankrupted America. Trust me when I say America is broke. Congress really does not have the money to hand out to those with no jobs because they feel the need to maintain several wars,military bases all over the world, and several thousand nukes. Oh yeah, there is also all those government departments, agencies and useless programs they desire to keep going. The empire has little concern for it citizens.
    Wait a minute, I forgot about all the illegal workers accepting low wage and no benefits. At this point a lot of American`s really do need those jobs the illegals are doing. Don`t even think about asking Congress to do something about the damn war on the Texas/Mexico border.
    It is time to gut government big time. We cannot afford it anymore.

  • gerryd 11/28/2010 5:07pm

    I watched Warren Buffet and Bill Gates this morning saying they would be willing to help people!! Is it just me or do all of you notice how much the plight of the unemployed and the 99er’s is DOWNPLAYED BY THE NEWS MEDIA AS WELL AS THE POLITICIANs and even these wealthy Philanthropists? It would not matter to me one bit if the Dow Jones crashed as low as it could go! We have nothing to lose. They have taken away our jobs, our self-esteem, our dignity, our only meager source of income, our once decent credit ratings, refer to us as “adding to the DEFICIT” rather than struggling Human Beings, and make me wish every night that I would not wake up the next day!! God Bless America Ha!! – It should be God HELP America!! I hope this country goes into a deep Depression and then those FAT CATS can feel what it feels like to suffer and worry – but that will never happen for sure!!! Wishful thinking on my part!!!

  • gerryd 11/28/2010 5:12pm

    What Congress and the Senate is doing to the unemployed is similar to the water-boarding torture I believe it is called. Yet they have more concern and compassion for those cruel, horrific people who DESERVE it, than they do for their own American People!!!

  • yvonne8 11/30/2010 4:07pm

    Republicans are the artistocracy while Democrats are the minions. That’s the way they like it; they refuse to step down off their pedestals. Jobs are scarce, yet Republicans refuse to extend benefits or add Tier V. Politics is their game while personal gain supercedes any assistance for their fellow unemployed Americans. Republicans know the economy is sluggish and will remain slow/slower over the next two years. Why should they lift a hand to unemployed Americans; afterall, it’s not their problem. Republicans and their spouses live in warm homes, their children are well educated; and, enjoy the good life at the expense of the underemployed and unemployed. Master/slave; owner/renter; banker/borrower; haves/have nots; successful/unsuccessful; richer/poorer; employed/unemployed; boss/worker bee; hell/heaven.

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