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Friday, July 3, 2009

Financial Times Takes a Sobering Look at New Numbers

In less than a year and a half the unemployment rate has almost doubled in the United States, from 4.8% 16 months ago to 9.5% today. The Financial Times warns that these rising numbers signal a more lengthy and difficult recovery than many have anticipated and that policy makers must take into account the fiscal reality of a prolonged downturn:
They will have to recalibrate fiscal and monetary stimulus to recognize the fact that “temporary and targeted” stimulus will be less potent than anticipated. But the inclination to increase the dose of stimulus will be tempered by the fact that, as the fiscal picture deteriorates rapidly, the economy is less able to rely on future growth to counter the risk of a debt trap.

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