The Big Problem Is Long-Term Unemployment

Short-term unemployment in the United States has fallen below where it was in late 2007, before the Great Recession began.

Bureau of Labor Statistcs, via Haver Analytics

And medium-term unemployment is not much above the pre-downturn level.

Bureau of Labor Statistcs, via Haver Analytics

But long-term unemployment remains stubbornly high, although the current figure, 4.1 percent, at least has dipped below what had been (before the Great Recession) the post World War II high of 4.2 percent reached in early 1983. More than half of the unemployed workers have been out of work for at least 15 weeks.

Bureau of Labor Statistcs, via Haver Analytics

There are still 4.4 million workers who have been unemployed for at least six months. That is down from the peak of 6.7 million, but it is still very high. And that number does not include people who have given up looking for work.

Fed policy is not well suited to deal with this problem. But it does not look as if fiscal policy, which would have a chance, will be used anytime soon.