Sure looks like Krugman was right when he said the stimulus package was too small. And the diddling around with the banking bailout isn't helping, either:
The nation is losing jobs so quickly that the government, racing to deal with the crisis, is having trouble keeping up.
The U.S. unemployment rate last month leapt half a percentage point, to 8.1 percent, the highest level since 1983, according to data released yesterday. The stunning pace of job losses raises the possibility that, perhaps as early as this summer, one in 10 Americans will be out of a job even though they are actively looking for work. It also means that the government faces even more pressure to take further action to stabilize the economy and the financial system.
President Obama, speaking in Columbus, Ohio, to police cadets whose jobs were saved with money from the $787 billion stimulus package, called the new unemployment figures "astounding."
"We have a responsibility to act," he said, "and that's what I intend to do."
Analysts increasingly view the administration's actions so far as insufficient given the scope of the problem. The stimulus package was designed to "save or create" 3.5 million jobs, according to the administration. But the nation has already lost 4.4 million jobs since the start of the recession. Many banks and other financial institutions, whose health is critical to the economy, are teetering, and the Treasury Department has yet to finalize the details of its plans to remove from their balance sheets the toxic assets dragging them down.
"It's premature to say we need another stimulus, but the economy is performing much worse than when [the law] was signed, and the odds are increasing that we'll need a bigger policy response," said Mark Zandi of Moody's Economy.com, who has advised Democratic lawmakers. "What we've learned is policy has been a step behind this whole downturn. It's important to get a step ahead."
The International Monetary Fund yesterday urged governments worldwide to consider additional fiscal stimulus, noting that the public sector must help prevent a collapse of confidence.