The Green Shoots are Dead

The latest jobless figures show America's economy is stuck in the doldrums. The US urgently needs a new stimulus injection

by Dean Baker

The June US employment report [1] should convince even the determinedly ignorant that the time has come for another round of stimulus for the American economy. The economy is continuing to shed jobs and work hours at a very rapid pace. The unemployment rate is virtually certain to cross 10% by the end of the summer and will likely hit 11% before we are very far into 2010. This is a scenario much worse [2] than the Obama administration [3] had expected when it crafted its stimulus package. It is time for it to adjust its plans accordingly.

When the Obama administration put together its stimulus package in January, it was projecting that, in the absence of any stimulus, the unemployment rate would peak at just over 9% early in 2010. With the unemployment rate reaching 9.5% in June, they clearly underestimated [4] the size of the downdraft hitting the US economy [5].