Stagnation

The IMF has for the third time in a year downgraded the UK's predicted level of growth, now predicting that the UK economy will grow a measly 1.75% in 2011. There's bad news for young job-seekers as well:

Several times in the report the IMF says the likelihood is that the UK and other developed countries will see rising unemployment this year with the potential for social unrest increasing. Developing nations, which have huge numbers of young people, will also be badly affected.
"Unemployment poses grave economic and social challenges, which are being amplified in emerging and developing economies by high food prices," it says.

"The young face particular difficulties. Historically, for Organisation for Economic Cooperation and Development countries the unemployment rate for young people aged 15 to 24 has been about two and a half times the rate for other groups.

"Though youth unemployment typically increases sharply during recessions, the increase this time was greater than in the past: in a set of eight countries for which long time-series of youth unemployment are available, the increase averaged 6.5 percentage points during the great recession, compared with four percentage points in previous recessions," it says.

Unemployment among Britain's 16-to-25-year-olds was 974,000 last month and is expected to exceed the politically sensitive 1 million mark on Wednesday when official figures are published.

 What will it take for George Osborne to change his mind about cuts and start giving the economy the stimulus it needs?

All about jobs, jobs, jobs

Paul Krugman, as so often, speaks my mind. In his column this week he points out that in all the clamor to reduce the deficit, the important discussion about job creation that was going on before the election has been completely left to one side, while unemployment is still sky-high. And once again, President Obama didn't even let the fight start before he caved:

I still don’t know why the Obama administration was so quick to accept defeat in the war of ideas, but the fact is that it surrendered very early in the game. In early 2009, John Boehner, now the speaker of the House, was widely and rightly mocked for declaring that since families were suffering, the government should tighten its own belt. That’s Herbert Hoover economics, and it’s as wrong now as it was in the 1930s. But, in the 2010 State of the Union address, President Obama adopted exactly the same metaphor and began using it incessantly. [...]

So who pays the price for this unfortunate bipartisanship? The increasingly hopeless unemployed, of course. And the worst hit will be young workers — a point made in 2009 by Peter Orszag, then the White House budget director. As he noted, young Americans who graduated during the severe recession of the early 1980s suffered permanent damage to their earnings. And if the average duration of unemployment is any indication, it’s even harder for new graduates to find decent jobs now than it was in 1982 or 1983.

Obama's not a fighter, and I'm sure he thinks he's got this all figured out. I almost trust him, because over and over again he's surprised me by how well he plays the long game. But emphasis on the almost.