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“When they see a little hope that there may be jobs out there, they start to come back in again. And that can cause the measured unemployment rate to go up — temporarily,” Geithner told “Good Morning America’s” George Stephanopoulos in an exclusive interview. “But what we expect to see, and I think most forecasters expect this…is an economy that’s gradually healing, gradually strengthening, businesses starting to add people back.”
Of course, this is a quick reminder that unemployment rates don’t effectively translate into those-out-of-work rates. Unemployment only ticks up because those who are not working are attempting to find jobs again… which gives credence to the real figure of between 16-19%.
Solution? Certainly not to end the Bush tax cuts… you’re talking about a $3 trillion drain on capital and credit should that occur, one that will stall any recovery.
Hopefully the policy wonks won’t let politics interfere with economic theory — however unsound I may believe Keynesian economics to be, this is precisely how you recover from a crisis of credit such as the one we’ve experienced thus far.