How long will unemployment keep money market rates down?
September 28, 2010
Today's stubbornly high unemployment rate could go even higher in the next nine months, even without a double-dip recession, Federal Reserve Bank of San Francisco economists say.
In a Sept. 27 "Economic Letter," economistsand
The dreaded double dip
In an August "Economic Letter," Federal Reserve Bank of San Francisco economistsand
The U.S. economy has grown for four consecutive quarters since the recession ended in June 2009, but that growth has been relatively weak, Lang and Lansing point out. Sales of goods and services produced domestically rose just 1.1 percent on average.
"Due to the severity of the recession and the lackluster nature of the recovery so far, the level of real GDP at the end of the second quarter of 2010 was still 1.3 percent below the pre-recession peak reached more than 2.5 years ago," they write.
Yet the Congressional Budget office estimates the economy's potential annual growth rate over the next five years is 2.1 percent, and some other estimates are even higher. "If real GDP growth were to fall below potential growth for a sustained period, then the unemployment rate would be expected to rise," they conclude.