In short, the story says the stagnating US economy is making Ben Bernacke and others consider advising more stimulus money. Unemployment was down slightly in June to 9.5 per cent, due to the "discouraged worker" effect. That is, there were 125,000 fewer jobs than the month previously, but there also were fewer people looking for work so, largely because they've given up.
Two weeks ago Nobel Laureat Paul Krugman called for continued stimulus in order to forestall the Third Depression. He commented last week as Americans were celebrating Independence Day on the criminal way US legislators decided to "punish the unemployed" by not agreeing to extend the period of unemployment insurance eligibility before they went on summer vacation. The average length of unemployment in the US is now 35 weeks, but benefits run out after 26 weeks. Can you imagine what that means for the families involved--and also for the families working produce the goods and services consumed by their fellow citizens.
By way of contrast, consider the Canadian case: our June unemployment rate was down to 7.9 per cent, below 8 per cent for the first time since January 2009. This is all the more striking because over the last three decades Canada's unemployment rate has been consistently higher than that of the US, for reasons that are unclear. What is clear that when Stephen Harper's feet were held to the fire, a stimulus package was passed in March 2009 which worked better than the one in the US. This included an extension of the length of employment insurance eligibility from 45 to 50 weeks, among other things.
I'd like to think the APF story is right, that Krugman's words and the bad news about what is happening has gotten through to Bernacke at the Fed and others who call the shots in the US. We'll be watching closely in the next few days. The take home lesson: people can't buy things when they don't have money.