More on Uncertainty
Our model estimates that uncertainty has pushed up the U.S. unemployment rate by between one and two percentage points since the start of the financial crisis in 2008. To put this in perspective, had there been no increase in uncertainty in the past four years, the unemployment rate would have been closer to 6% or 7% than to the 8% to 9% actually registered.
Study via Timothy Taylor. See our previous post.
Interesting measurement!
And I agree with Timothy Taylor that our government’s actions have contributed significantly to the uncertainty. Example: Dodd-Frank isn’t even finished yet.
August, you’re absolutely right — extensive reform during a recession leads to more uncertainty, decreasing aggregate demand.
Very nice research.
I can definitely see how uncertainty would cause many small businesses to take a wait-and-see attitude before expanding. This would especially be true if they had low-skilled workers with the employer mandate looming on the horizon.
We can’t expect businesses to want to invest in this economy with so much uncertainty. I don’t know why the current admin wont reform the tax code, and add stability.
But we still don’t know what the real unemployment level is. 8% doesn’t encapsulate the number of people who stopped looking.