Monday, January 19, 2009

The case for a huge economic stimulus

More than a third of the U.S. labor force will be plagued by periods of unemployment or underemployment next year if government spending does not surge substantially to spur demand for goods and services. So says a new Issue Brief published by the Economic Policy Institute.

In the absence of a large recovery package, the unemployment rate is expected to reach 10.2 percent in mid-2010, according to the Brief, and middle-income families would earn about $4,700 less in 2010 than they had in 2007,

But the overall statistics “don’t capture the pain” that would impact specific groups of people, warn Lawrence Mishel and Heidi Shierholz, the authors. Those especially hard hit next year would include:

-- Nearly one in five African-Americans in the labor force would be jobless.
-- So would 13.1 percent of Hispanics.
-- Underemployment would reach 18.8 percent of women workers.

In the Brief, entitled “Without Adequate Public Spending, a Catastrophic Recession for Some,” the authors recommend government spending on the order of $600,000,000,000 a year for two years to head off the “catastrophe” they consider otherwise inevitable.

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