On Tuesday, President Obama signaled a new economic direction by announcing his appointment of Alan Krueger to chair his Council of Economic Advisors. Krueger’s background is in employment and labor policy, so he will hopefully function as a high-level advocate for bringing down the persistently high levels of unemployment and alleviating our economic malaise. This appointment couldn’t have come soon enough.

Americans continue to suffer from this Great Recession. According to a study released this week by The Conference Board, consumer confidence has hit its lowest level since April 2009. There are many potential reasons for this abysmal statistic: unemployment and underemployment remain at stubbornly high levels, the housing market continues to be a drag on the economy, the recent debt limit fiasco put us on the verge of default, illustrating just how dysfunctional Washington can be, and the subsequent S&P downgrade sent shocks waves through the market. Even the bravest souls who dare to peek at their 401(k) statements are sure to be spooked. And to make matters worse, the U.S. labor market added no new jobs in August, according to a Bureau of Labor Statistics report that was issued this morning.

Dimitri Papadimitriou and Greg Hannsgen of the Levy Economics Institute have recently detailed in a paper titled “Not Your Father’s Recession,” how this recession is far worse than other recessions that we’ve experienced. One key measure they point to is the employment-to-population ratio. From the beginning of the recession in December 2007, this ratio has decreased by 4.6%, from 62.7% to 58.1%. In contrast, in all other recessions since 1973, this ratio never decreased by more than 3% and always rebounded much more quickly. Clearly our current slide over the last 43 months has been deep and long.

Continue Reading