40 Million People Will Be Out Of Work Next Year, OECD Warns

While today's IMF cut in US growth estimates served merely to reestablish long positions in the long end of the curve and to serve as a basis for this quarter's IMF "comedy of errors" update, a more concerning update was presented by the far more credible OECD whose latest forecast is truly troubling for all those who claim the global economy is in a recovery.

As reported by AFP, in the latest economic forecast from the Organization for Economic Cooperation and Development, the Paris-based body made up of 34 of the world’s most developed countries, the conclusion is that the world economy risks being bogged down in a low-growth spiral unless measures are taken to spur demand and incite businesses to boost their stubbornly sluggish investments.

Hint: raise rates now, send the economy into a tailspin, do QE4 imminently, pretend it is to "boost the economy", send the S&P500 to 3000. Rinse. Repeat.

Coming just hours ahead of the IMF's own slashing of US growth forecasts, yesterday the OECD cut its forecast for the U.S. economy. The OECD now expects U.S. economic growth to slow to 2% this year from 2.4% in 2014, compared to March when it forecast an acceleration to 3.1% in 2015. Odd: today's IMF revised cut is nearly identical. One wonders if the IMF's economists don't merely read the OECD's work and present it as their own?

Canada's growth estimate was also lowered to 1.5% from a March prediction of 2.2% and November’s estimate of 2.5%. It must have snowed harshly there too.

Looking at the bigger picture, the overall global economic growth is now projected at just 3.1% this year — half a percent lower than the November estimate.

The Eurozone is still expected to grow 1.4% this year, unchanged from the March forecast: should Greece exit the Eurozone, the OECD can just a minus sign in its next revision.

The OECD also trimmed its forecasts slightly for China and Japan.

The world economy has suffered from stubbornly weak growth throughout its recovery from 2009’s Great Recession. This, the OECD notes, “has had very real costs in terms of foregone employment, stagnant living standards in advanced economies, less vigorous development in some emerging economies, and rising inequality nearly everywhere.”


The OECD says weak investment, with growth of little more than 2 per cent this year, is partly to blame for the slack recovery. Its forecast of stronger growth in 2016 hinges on its prediction that investment will almost double to 4 per cent next year — although it warns that this upturn “could remain elusive.”

Of course, it could be unelusive if and when corporate buybacks become an official part of the GDP calculation, perhaps replacing such economic relics as fixed investment, which nobody really does any more.

But perhaps the most disturbing, and factual (unlike the IMF's forecast of Greek 2022 debt/GDP), finding is that unemployment in the OECD region has fallen only 1 per cent since its 2010 peak.

In other words, by 2016, the group warned, 40 million people will be out of work, 7.5 million more than immediately before the crisis.

Um, what recovery?

Oh, and 40 million angry people we should add, with little hope of professional realization and lots of free time. Is it surprising why in recent months not a day passes without some mass violence event breaking out somewhere in the world (but mostly in the US)?

And speaking of jobs, tomorrow we will learn if nearly 8 years after December 2007, the US will finally recover all the full-time jobs lost during the second great depression:


... or if the job reality for most American potential employees is shown on the picture below.

Job seekers line up outside at Choice Career Fairs' New York career fair at the Holiday Inn Midtown in New York