Friday, July 3, 2009

Krugman: Be happy you still have a job

Now I feel bad about complaining about working on a holiday... Krugman brings the sunshine:
Since the recession began, the U.S. economy has lost 6 ½ million jobs — and as that grim employment report confirmed, it’s continuing to lose jobs at a rapid pace. Once you take into account the 100,000-plus new jobs that we need each month just to keep up with a growing population, we’re about 8 ½ million jobs in the hole.

And the deeper the hole gets, the harder it will be to dig ourselves out. The job figures weren’t the only bad news in Thursday’s report, which also showed wages stalling and possibly on the verge of outright decline. That’s a recipe for a descent into Japanese-style deflation, which is very difficult to reverse. Lost decade, anyone?

Wait — there’s more bad news: the fiscal crisis of the states. Unlike the federal government, states are required to run balanced budgets. And faced with a sharp drop in revenue, most states are preparing savage budget cuts, many of them at the expense of the most vulnerable. Aside from directly creating a great deal of misery, these cuts will depress the economy even further.

Unsurprisngly, he advocates for another stimulus. Since the majority of analysts thought the last one was too small, I tend to think he's right... but I'm not optimistic about it happening for all the reasons he states in his article.

How exactly can we get 60 votes in the Senate for another stimulus?