A little end-of-the year cheer, from the AP:
WASHINGTON – The number of Americans applying for unemployment benefits fell last week to its lowest level in nearly 21/2 years, a sign that the job market is slowly improving.
Applications dropped by 34,000 to 388,000, the fewest since July 2008, the Labor Department said Thursday. The number of applications has either fallen or remained unchanged in five of the last six weeks.
The rule of thumb for economists is that fewer than 425,000 new people seeking unemployment benefits signals modest job growth. But they also caution that applications need to fall consistently to 375,000 or below to bring down the unemployment rate. Applications for unemployment benefits peaked during the recession at 651,000 in March 2009.
In general, economic forecasts call for somewhat sunnier days ahead, with a few even upgrading their predictions for 2011. Mark Zandi of Economy.com, for example, concludes that “the policy response, in its totality, has been very aggressive, and I think ensures that the recovery will evolve into a self-sustaining expansion early in 2011.”
I’m no economist, but the analysis that makes the most sense to me comes from Olivier Blanchard, chief economist of the International Monetary Fund, who observes what he calls a “two-speed recovery.”
The two-speed recovery, low in advanced countries, fast in emerging market countries, is striking and its features are increasingly stark. They will probably dominate 2011, and beyond.
… Emerging market countries were affected by the crisis through both trade and financial channels. The turnaround in trade has been nearly as sharp as the earlier collapse. But while trade has not yet fully recovered, most emerging market countries have been able to increase domestic demand so as to return to high growth. In turn, their good performance has led capital flows to come back, in some cases, with much force. For many of these countries, the challenges are now how to avoid overheating and how to handle capital flows.
In many advanced economies, the crisis damage was much deeper. The financial system was badly broken. Securitization has to be reinvented. In many of these countries, markets are still uncertain about the true health of banks and financial intermediation is not working well. Combine this with the need to correct past excesses, from low saving to excess housing investment and the result is a slow recovery, barely strong enough to decrease unemployment.”
And to think, all of that international financial damage was brought on by one little gay Jewish Democratic congressman from Massachusetts who somehow forced an overwhelmingly Republican Congress and a Republican president to bend to his nefarious will.