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Unemployment at 6%: Not a Chance.

Written by Gary North on October 1, 2012

The Federal Reserve has adopted QE3 to get the unemployment rate down. But how long will this take?

Here are the basics of employment. Every month, the working-age population grows by 100,000 people.

To get the unemployment rate to 6% will take job growth of at least 250,000 a month for at least four years.

Month after month, the increase in the number of jobs hovers around 100,000. So, the unemployment rate does not go below 8%.

Problem: orders for goods  are dropping . Manufacturing is headed into the pits. In Chicago, it is at a 3-year low.

Nationally, new orders in the ISM index — widely respected —  in August fell to 47.1. That puts it back to its August 2009 level.

Recession in Europe is hurting. U.S. exports.

The “fiscal cliff” looms on January 1: spending cuts and tax hikes. Spending cuts are long overdue. Keynesians oppose them. Tax hikes are likely to slow the economy. Supply-siders oppose them.

Congress may sit tight. A lame-duck Congress could kick the can by extending Bush’s tax cuts, which expired in 2010, but which were extended. It seems hard to believe that Congress will allow spending cuts, meaning reductions in projected increases in spending.

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2 thoughts on “Unemployment at 6%: Not a Chance.

  1. We can help ourselves immediately by cutting off ALL Foreign Aid ..Loans…UN Support…World Bank Funding…ALL Immigration…ALL Work Visas/Greencards …ALL Foreign Student Funding….deport deport deport immediately ALL illegal Aliens and Expired Visas/Passports!
    Pass English as Official Language!
    Only US Citizens in ALL Government JOBS/Appointments

  2. No one selling global free trade back when NAFTA and GATT were being debated ever considered that once the US outsourced all its manufacturing to the Third World, the high wages that come with manufacturing were eventually going to dry up as well.