“Economy in Free Fall”; More Stimulus Needed

That thud you just heard was the economy dropping off the table.

The just-released statistics showing unemployment hitting 8.1% is a nasty indicator of what people already understand: that we’re in a heap of economic trouble.

All told, we’ve lost 4.4 million jobs since the recession started.

We’ve lost 3.3 million jobs in the last six months alone, and we’re likely to keep losing at this pace for several more months to come, until some of that Obama stimulus money kicks in.

The problem is, there’s not enough of that money to go around.

Obama keeps saying his plan will “save or create” 3 to 4 million jobs.

Saving jobs won’t help any of those 12.5 million who are officially unemployed, or the millions more unemployed and discouraged workers who aren’t even in that stat.

Even if Obama created all of those 3 to 4 million jobs, that wouldn’t be sufficient to make up for the jobs lost already or those that are likely to go the wayside in the treacherous months ahead.

And that’s not even accounting for the increased number of jobs the economy needs to create just to tread water with the increased number of available workers.

“In order to simply keep up with population growth, the country would have needed to have added an estimated 127,000 jobs every month over this period, for a total gain of 1.8 million jobs. In other words, the economy is currently approximately 6.2 million jobs below where it would need to be simply to have maintained pre-recession rates of employment for the country’s workforce,” as Heidi Shierholz of the Economic Policy Institute points out.

Go to EPI’s website for a scary graph of the current unemployment situation versus previous ones. Today’s is much steeper.

The outlook is bleak.

“The economy is in free fall with no obvious brakes in place,” says economist Dean Baker, co-director of the Center for Economic and Policy Research.

In doing his budget and stimulus package, Obama had assumed that unemployment would hit 8.5 percent in the fourth quarter. Those forecasts “now look impossibly optimistic,” says Baker. “The unemployment rate is likely to hit 8.5 percent by March and will almost certainly cross 9 percent by the early summer. Without substantial additional stimulus, it could cross 10 percent by year-end.”

That’s why Obama is going to have to go back to Congress for another stimulus package in the next few months.

It should be harder then for the Republicans to keep opposing the only procedure that can get the economic patient breathing again: the fiscal paddles.

But I expect the Republicans will stay on script because, as their leader, Rush Limbaugh, says, they want Obama to fail. And they’d rather have a depression than admit that the government needs to intervene in the economy.