Thursday, October 15, 2009

Unemployment And Stimulus

Here is a Wall Street Journal editorial from Monday:

I found it interesting for two reasons. First, it has a chart that shows the actual Unemployment Rate vs. that forecast in "The Job Impact of the American Recovery and Reinvestment Plan." Currently the Unemployment Rate is approximately 2% above the rate forecasted with the stimulus.

Second, the editorial mentions the idea of an employment tax credit, i.e. granting a tax credit to employers who hire. This is yet another stimulus idea, and as such is subject to the same risks and unintended consequences that I have previously written of. Apparently one idea is to grant a $3000 tax credit for each new hire in 2010.

I don't believe an employment tax credit will solve, or present a significant solution to, our national unemployment problem. As I wrote in the "Why Aren't Companies Hiring?" blog series the Unemployment problem is not simple in nature.

SPX at 1092.02 as this post is written

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