More Savings Hurting The Economy?

" What they're saying of course on Capitol -- now let's have a look about what they're saying on Wall Street and main streets specifically. As it relates to the jobless recovery all this week. We've been good bargain with earnings reports that it surpassed expectations. But questions are being raised how much of the good news is doing the company shedding jobs versus revenue and sales. Federal Reserve Chairman Ben Bernanke this -- told congress while the economy showing signs of life. Unemployment could remain high into 2011. Climbing toward 11%. So -- the US now facing the potential challenge of the jobless recovery. Joining me now Brian Wesbury the chief economist for the investment advisory firm first trust advisors. More so commend the chairman and editor in chief of US news and world report and Tom -- 8 convenient good morning channeling and add -- good to see as more its effort to with a comedian is just shut us up pretty well in the best company. What you would account recently and down a very in depth column about the unemployment figures going to very specific details. You believe it's undermining an economic recovery tell us --"

" Well because when you get an unemployment rate that is going to break through double digits plus 10% that is to say and it's probably going to approach 11% within the next year. You have an awful lot of people unemployed in addition to that you have an awful lot of people under employed. You have an unemployment rate than under employment rate the combination -- to become a household bottom plummeted sixteen point 8%. It's 25 million people that's bound to have a huge effect on the willingness of consumers to spend. It also undermines confidence in people's. Jobs and in people's futures so that they are also going to be unwilling to spend so what you have. Is a combination of higher unemployment and as a result of the insecurities that go that higher savings rate. That every dollar savings comes out of consumption that's the biggest part of the economy and so you had 320 billion dollars of additional. Check -- personal income that admiration the last three months in part because of the stimulus program. Only one billion dollars of that was spent on consumption that tells you what is going on in the mind of the consumer. They're saving rather than spending and that is the real depressing for the economy. What is more it is it -- don't if the whole stimulus program with about jobs jobs jobs it's not working. And we are going to be looking at the possibility that this kind of concern over unemployment it's going to suppress the economy for the next year."

" do you agree that he's just. Yeah I I don't hides its candidates on the little -- I graduated from college in 1981. The unemployment rate in 8182. Was over 10%. Was close to 11% when I graduated. And and yet I look back over this last thirty years and they were boom and in fact that 1980s were boom. We've got it it just because the unemployment rate is -- does not mean the economy cannot grow enough. I'm not disagreeing with more that people aren't a little shell -- we had a panic last year was the first panic we've seen in this country in over a hundred years. But the fact of the matter is is that unemployment when it. Peaks. It's always after the recovery has begun. Finally let me just address this savings issue this morning I Google done. Mort Zuckerman China and savings and I found a lot to pieces by you or at least some writing by you more. That said China's great savings rate was one of -- was one of its real benefits was one of the reasons why it was growing so fast why it was such a powerful place. So I'm not sure why people are so worried about savings when we look at China. And say oh they're great sabres that's why they're so competitive I so in other words I guess to come back to this unemployment is high I wish it wasn't it especially when it hits over eight or 9% everybody. Knows someone who lost the job. And that and that's that. That in itself is painful. But that doesn't mean the economy can't turn around and all this worry. If people are gonna save. I think that's great news for the economy more savings means more investment more investment means more growth. And that won't bring down the unemployment rate much faster than 2011. I think the unemployment. Very close to peaking and we're going to see it lowered next year."