The Jobless Need Help
THE economic news remains gloomy in the United States. Unemployment moved to 6.5 percent in February, a four-year high. Sales of American-made cars and light trucks fell 4.7 percent in the same month. Several of the nation's biggest retailers reported weaker sales last month. Whether the end of the Gulf war will cheer up consumers this month remains to be seen. Factory orders were down in January. And so it goes. If the current recession proves typical, unhappy statistical news will dominate for at least a few months to come. Most economists expect the recession to end about midyear. But that is the point when the economy will be at its lowest in this cycle. It could be a year or so before economic activity in general rebounds to where it was at the start of this recession last summer. The unemployment rate may take even longer to move back down to the 5.3 percent level of a year ago. The number of unemployed co uld remain above its present 8.2 million for many months to come. As a result, some of the glow from victory in the Gulf may well fade.
What's to be done about it?
President Bush had it right in his address to Congress March 6 when he said, ``Our first priority is to get this economy rolling again.'' That means the Federal Reserve System must keep the money supply - the fuel for the economy - growing vigorously. In the last four weeks, one measure of money known as M2 has grown at an annual rate of 7.4 percent. That follows a long period of slow growth - 3.2 percent over the last 12 months.
Fed Chairman Alan Greenspan told Congress last week the upturn in the economy ``is going to occur within a reasonably short period of time.'' Of course, ``reasonably short'' is a vague term typical of a central banker. If the Fed doesn't keep its foot on the monetary accelerator, recovery could be delayed until the third quarter.
Meanwhile, Congress and the administration should plug the leaks in the nation's unemployment insurance system. Too few of the jobless - 37 percent last year - are covered by unemployment benefits. Those not covered are faced with using up their savings and then possibly going on welfare. Many of these jobless are victims of the Fed's fight against inflation. They weren't laid off for incompetence or other faults, but because their employers couldn't afford to keep them on the payroll when sales plunged . They deserve the nation's help through these rough times.
Rep. Thomas Downey (D) of New York was to introduce legislation this week making it easier for the unemployed to qualify for benefits. It should be passed quickly.