That the U.S. would experience a top-line unemployment rate of over 10 percent before the end of 2009 was something most observers of the economy could see coming six months ago, if not earlier. Which makes the somewhat overwrought response to today's admittedly bad numbers a little unexpected.
Megan McArdle titles her post "America and the Terrible, Horrible, No Good, Very Bad Jobs Numbers." Felix Salmon ponders "A Global Problem with No Solution." Paul Krugman has "got a sick feeling about the whole situation."
I don't want to sugarcoat anything. Calculated Risk and The Big Picture have oodles of "butt ugly" charts and graphs that make it abundantly clear that the current labor picture is as bad as anything Americans have seen since the Great Depression. I myself was moaning about the lack of jobs as recently as last Thursday. It's miserable out there.
But as readers were quick to remind me last week, unemployment is a lagging indicator. We have known all year that the unemployment rate would likely rise steadily throughout the year. Let's remind ourselves again that the rate at which the economy is shedding jobs is slowing. That's a good thing. The point at which it would be time to cry out in despair that the world is ending would be if the rate of job loss started growing again -- a sign of the dreaded double dip recession.
Paul Krugman is repeating his usual refrain: Obama should have pushed for a bigger stimulus at the beginning. Perhaps, in the most Rooseveltian of all possible worlds, he could have come into office and immediately orchestrated a massive WPA-like jobs program. But even if one accepts the rather unlikely possibility that Obama could have pushed through a budget deficit even larger than the $1.4 trillion we are currently looking at, I think there's good reason to believe that it would have been very difficult to materially alter the shape of the unemployment curve in the first nine months of the presidency. Remember, Obama came into office at the absolute height of the crisis -- the shock to the economy that hit a year ago had barely begun to work its way through its system.
There are definitely some bad future scenarios lying in wait. One possibility is that high unemployment next year leads to a Republican takeover of the House, and complete government paralysis ensues. Then we might find out for sure what happens when the government does not stimulate an economy as sick as ours. That is an experiment I am not looking forward to. But for the moment, we do have a White House committed to fiscal stimulus, even if it is operating under budgetary constraints -- not of its own making -- that severely reduce its freedom of action.
The numbers are bad, sure. But they could be worse, and they might get better. For the sake of all our animal spirits, let's not despair.