The jobless recovery

The weekly [initial unemployment] claims number can't seem to fall below 600,000. ...

This is bad news for many reasons, not least of which is what is suggests about the structural problems in the economy that are likely to persist for years. But the real danger is the threat joblessness poses to an economy that, at least according to most macroeconomic variables, is stabilising. As unemployed individuals exhaust their available savings they'll find themselves curtailing spending and defaulting on obligations, both of which contribute negatively to economic output. Sustained high unemployment also places a strain on state budgets. Faced with growing demands on unemployment assistance, states are forced to cut spending elsewhere. But this is procyclical behaviour, which may act to increase unemployment further, forcing additional budget cuts, and so on.

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