Except the NYT headline said the opposite: "President of San Francisco Fed Sees Slow Recovery, Especially in Jobs." According to the article, Janet Yellen, the President of the San Francisco Federal Reserve Bank, expects that the unemployment rate will fall to around 8.0 percent by the end of 2011. By contrast, both the Obama administration and the Congressional Budget Office project that the unemployment rate will average above 8.0 percent for 2012. In other words, Yellen is forecasting a somewhat brighter unemployment picture than is being used for budget analysis and other purposes.

One might think that the mass unemployment caused by the collapse of the housing bubble might lead people to be concerned about restructuring the financial sector: not at the Washington Post. Robert Samuelson tells us that the meltdown shows that the welfare state is no longer viable.

Actually, he has a pretty good case. With Goldman Sachs and the rest of the financial sector siphoning off an ever larger share of the country's output, we may not be able to afford much of anything in the future. If the financial sector's share grows at the same rate it has been growing over the last three decades, the rest of us will have to learn to get by on less.

--Dean Baker

The NYT has a good article on how millions of workers are likely to face prolonged joblessness as a result of the current recession. The article implies that there has been a change in the relationship between economic growth and employment in recent decades as it has taken longer for the economy to recovery the jobs lost in the last two recessions than in prior recessions.

While it has taken longer to recover the jobs lost in the downturn, this has nothing to do with a changed relationship between growth and jobs. The problem is simply that growth has been very weak. Here is the cumulative growth in the 8 quarters following the end of the last 5 recessions:

The NYT has an analysis this morning of the Fed's "exit strategy" from its quantitative easing policy that was designed to support the economy after the collapse of the housing bubble. It seems that the Fed is pursuing an exit strategy, so it is reasonable for the NYT to report on the policy.

The Labor Department reported an increase of 31,000 initial claims for unemployment insurance last week. The weekly data are always erratic, but there has been a clear upward movement since December numbers. The four-week average was 467,500, which is considerably higher than a level consistent with job growth (@400,000).

Also, last week's numbers were almost certainly depressed by bad weather on the East Coast. Many people who would have otherwise filed claims were unable to get to unemployment offices as a result of snow storms. Therefore, we may expect a jump in the current week. The number of claims deserved far more attention than it received.

--Dean Baker

The Post reported on the administration's mortgage modification program. At one point it presents an estimate Credit Suisse on the number of foreclosures that would need to be prevented this year to stabilize house prices. (The article put Credit Suisse's estimate at 3.2 million. This is obviously wrong since that is close to twice the current pace of foreclosure.) This implies that stabilizing house prices at levels that are about 15 percent above trend is desirable. That is likely to create a situation in which current homebuyers see their house prices fall in subsequent years as house prices are finally allowed to adjust to deal with the excess supply.

The NYT told readers about a deal between the Senate and the Obama administration to establish a council of regulators that would have the responsibility of identifying systemic risk. It then adds that the council:

"addresses one of the primary lessons of the near debacle: that no one had been assigned to ensure the stability of the system as a whole and detect the kinds of excessive risk-taking and imbalances that could rock an entire economy."