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The Organisation of Economic Cooperation and Development 's latest Economic Outlook is out today, and it is full of some mildly good--if reserved--news. The big takeaway: the recovery is on, but it is slow and unemployment will keep rising across OECD nations at least until the middle of 2010 for the US, and likely later for Euro countries. Jørgen Elmeskov , head of the OECD's Economics Department, answers some key questions about the report's findings: Here's a look at the unemployment projections in the report: You can watch the OECD's press conference explaining the report, and access the full report here .

Ross Douthat references the below chart in his New York Times column today: That's the chart put together by Obama Administration key advisers Christine Romer and Jared Bernstein during the push for the Stimulus Bill. Douthat refers to it as an "unfortunate chart:" The first line — the hopeful line, the one that was used to sell $800 billion worth of stimulus — showed the rate of joblessness peaking this fall at 8 percent, and dropping swiftly thereafter. The second line — the no-stimulus scenario — showed unemployment peaking at 9 percent, holding there across 2010, and then declining in 2011 and 2012. Now reality has produced numbers of its own. In every month since May, the unemployment rate has been roughly a percentage point higher than the chart’s grimmer, stimulus-free scenario. This October, when Obama’s advisers predicted that unemployment would stand at 8 percent with the stimulus and just under 9 percent without it, the actual jobless rate leaped to 10.4 percent. This dire figure isn’t Barack Obama’s fault. Even in an age of near-trillion-dollar spending sprees, the president of the United States has only limited influence over the unemployment numbers. But the White House spent the winter pretending otherwise. The stimulus bill was framed and sold primarily as a jobs bill, and the Obama administration placed a substantial bet on the promise that the unemployment rate would start dropping before 2010 arrived. The rest of Douthat's piece focuses on the political rather than the economic landscape. But if one thing is clear after these last 14 months, it is that you can not separate the two. So if Douthat is right, there may not be a lot of political capital to spend on some of the proposals floating about for Washington to tackle the unemployment problem. But that doesn't mean they aren't worth exploring, debating, considering, shooting down (circle one) here. Douthat's NYT opinion page neighbor Paul Krugman , for instance, put forward the idea of adopting "European-style employment policies" like job sharing programs . And the Roosevelt Institute is running a series of "big ideas" from economists and historians for the next two weeks. For example, L. Randall Wray , economics professor at University of Missouri-Kansas City, proposes a "New Deal-style jobs program." Read his idea here .

San Francisco Fed President Janet Yellen spoke in Phoenix yesterday, and she presented a relatively reserved view of the economy. it was her first speech since the economy entered its current recovery phase, and she defended and commended government action in fighting off economic meltdown. But she also warned that this recovery is going to be very slow. And she focused on two key factors--household spending and the woeful labor market: Consumers have surprised us in the past with their free-spending ways and it’s not out of the question that they will do so again. But I wouldn’t count on them leading a strong recovery. They face high and rising unemployment, stagnant wages, and heavy debt burdens. Their nest eggs have shrunk dramatically as house and stock prices have fallen, and their access to credit has been squeezed. It may be that we are witnessing the start of a new era for consumers following the harsh financial blows they have endured. 2 We often hear the word “deleveraging” used to describe the push by financial institutions to scale back debt and build equity. Households too have now begun to pay down debt and rebuild their savings. This phenomenon can be seen not only in the United States, but in most countries that experienced similar housing booms. The United States was hardly the only country where households borrowed heavily just before a severe housing bust set in. And those countries with greater increases in debt relative to income before the crisis experienced greater declines in consumption spending once the crisis began. In the United States, the personal saving rate, which had fallen to an incredibly low 1 percent in early 2008, has averaged 4 percent so far this year and may well rise higher. In the current environment, such belt-tightening makes great sense from the standpoint of individual households. In fact, some households may have no other option because their access to credit has been crimped. Over the long run, higher saving is surely a good thing for our economy because it provides capital that can be devoted to modern infrastructure, technology, and other productive investments that enhance our standard of living. All the same, the transition to a higher saving plane could be painful if it reduces the growth rate of consumer spending for an extended period. Weakness in the labor market is another factor that may keep the recovery sluggish for quite some time. Payroll employment has been plummeting for more than a year and a half, and, even though the pace of the decline has slowed, unemployment now stands at its highest level since 1983. In addition, many workers have seen their hours cut or are experiencing involuntary furloughs. To bolster earnings in the face of weak revenue growth, employers have been aggressive in cutting labor costs and jobs, and my business contacts say they will be reluctant to hire again until they see clear evidence of a sustained recovery. Weak demand for workers is also putting a lid on paychecks. Wages are barely rising. A well-known measure of overall employment costs rose by only 1¼ percent over the past year, the smallest increase in the history of the series. High unemployment, weak job growth, and paltry wage increases are a recipe for sluggish consumer spending growth and a tepid recovery. The U.S. experienced so-called jobless recoveries following the previous two recessions in 1991 and 2001, when job creation remained weak for several years following the business cycle trough. In both cases, output growth was less robust than in the typical recovery and, unfortunately, things seem to be shaping up similarly this time around. Since she gave the speech in Phoenix, Yellen's comments about the real estate market were both interesting and relevant to the local crowd. And she also addresses the Fed's monetary policy, past and present. Read the full speech here .

Brad DeLong has been sharply critical of politicians(and members of the media, and some fellow economists). And if he ran the country, he would have done things differently than those in power over the last couple of years. For example, he writes at Project Syndicate and on his blog , he would have let Lehman Brothers and AIG fail. And he would have nationalized Fannie Mae and Freddie Mac. But even as he disagrees with those moves taken or not taken, he gives the Bush and Obama Administrations passing grades for their work in economic policy over the last 30 months: Thus it is worth stepping back and asking: What would the economy look like today if policymakers had acceded to the populist demand of no support to the bankers? What would the economy look like today if Congressional Republican opposition to the Troubled Asset Relief Program (TARP) program had won the day? What would the economy have looked like today had Senators Nelson, Snowe, and company done to Obama's discretionary deficit-spending plan what their predecessors did to Clinton's in 1993 and blocked it? The only point of reference is the Great Depression itself. That is the only time in more than a century when (a) a financial crisis caused a widespread, lengthy, and prolonged reinforcing chain of bank failures, and (b) the government by and large washed its hands--neither intervened on a large scale itself nor passed the baton to a consortium of private banks (usually, in the U.S., headed by Morgan) to support the system as a whole. It is now 19 months after Bear Stearns failed and was taken over by JP MorganChase, with the assistance of up to $30 billion of Federal Reserve money on March 16, 2008. Industrial production now stands 14% below its peak in 2007. By contrast, 19 months after the Bank of United States, with 450,000 depositors, failed on December 11, 1930 – the first major bank collapse in New York since the Knickerbocker Trust failure during the panic and depression of 1907 – industrial production, according to the Federal Reserve index, was 54% below its 1929 peak. Read What Would Have Happened If World Governments Had Washed Their Hands of the Financial Crisis? here .

On Wednesday, four academics from the University of California Berkeley discussed global unemployment. The participants: John Quigley , Goldman School of Public Policy, Brad DeLong , Department of Economics, David Card , Department of Economics, and Andrew Rose , Haas Business School. Video of the talk is now available here .

The Guardian's Paul Harris looks at California's predicament--climbing unemployment that is already the worst in 7 decades, a teetering state budget, huge cuts in education and health care--and asks whether the Golden State might be America's first failed state. Harris writes: Some of the state's leading intellectuals believe this collapse is a disaster that will harm Californians for years to come. "It will take a while for this self-destructive behaviour to do its worst damage," says Robert Hass, a professor at Berkeley and a former US poet laureate, whose work has often been suffused with the imagery of the Californian way of life. Now, incredibly, California, which has been a natural target for immigration throughout its history, is losing people. Between 2004 and 2008, half a million residents upped sticks and headed elsewhere. By 2010, California could lose a congressman because its population will have fallen so much – an astonishing prospect for a state that is currently the biggest single political entity in America. Neighbouring Nevada has launched a mocking campaign to entice businesses away, portraying Californian politicians as monkeys, and with a tag-line jingle that runs: "Kiss your assets goodbye!" You know you have a problem when Nevada – famed for nothing more than Las Vegas, casinos and desert – is laughing at you. This matters, too. Much has been made globally of the problems of Ireland and Iceland. Yet California dwarfs both. It is the eighth largest economy in the world, with a population of 37 million. If it was an independent country it would be in the G8. And if it were a company, it would likely be declared bankrupt. That prospect might surprise many, but it does not come as news to Tuua, as she glances nervously into the warming sky, hoping her parents will not have to wait in the car through the heat of the day just to see a doctor. "It is so depressing. They both worked hard all their lives in this state and this is where they have ended up. It should not have to be this way," she says. The article is not all doom and gloom. Some think the economic downturn could force California to become a leader in sustainable communities, and with its history as an innovation center, this is not hard to imagine. Read Will California become America's first failed state? here .

The Federal Open Market Committee (FOMC) is set to meet Tuesday and Wednesday of this week. Tim Duy points out that Ben Bernanke and friends will be meeting with a far more positive "economic backdrop" than they have had for a long time. But for all the relatively good economic news there is, uncertainty remains. Duy believes that the FOMC should continue to anticipate slow recovery, and he points to limited consumer credit as a primary reason: Given the steady anecdotal buzz surrounding the deterioration of the commercial real estate market, it is difficult to expect a rapid reversal of these trends. In short, if you think credit markets are still under stress, as the Fed certainly does, and are worried about the availability of credit to support future spending, also among Fed concerns, then shifting rhetorically to signal a tighter policy stance irrational. Moreover, it would seem inconsistent with plans to continue expanding the balance sheet via purchases of mortgage backed securities and TALF assets. So, it seems Duy is telling us not to expect a drastic change in Fed policy until we see a major shift in consumer credit and unemployment. Read Even With Growth, A Long, Hard Road here .

Add Fed Chair Ben Bernanke's voice to the growing chorus that the recession appears to be over and a long slow recovery is beginning. Bernanke spoke at the Brookings Insititution yesterday about the events of the last year, and during his speech he noted that he was well aware that forecasters were announcing the end of the recession. Here is a key excerpt from the speech. But the general view of most forecasters is that that pace of growth in 2010 will be moderate, less than you might expect given the depth of the recession, because of ongoing headwinds, including still ongoing financial and credit problems, you know, deleveraging by households, the needs for adjustments in the economy, sectoral adjustments in the economy, the need for a fiscal exit at some point, many, many factors that will likely, at least based on current information, make the 2010 recovery moderate, and in particular, not much faster than sort of the underlying potential growth rate of the economy. And the arithmetic is that unless the economy grows, you know, significantly faster than its longer term growth rate, it’ll be relatively slow in creating jobs over and above those needed to employ people coming into the labor force, and therefore, the unemployment rate would tend to come down quite slowly. So that’s a risk, that’s a possibility. Of course, there is on both sides of that forecast; we could have a stronger recovery, we could have a weaker recovery, but if we do, in fact, see moderate growth, but not growth much more than the underlying potential growth rate, then, unfortunately, unemployment will be slow to come down. It will come down, but it may take some time. Obviously, that’s a very serious concern, and that’s one reason why, even though from a technical perspective the recession is very likely over at this point, it’s still going to feel like a very weak economy for some time as many people will still find that their job security and their employment status is not what they wish it was, and so that’s a challenge for us and all policy-makers going forward. You can read a full transcript of the speech, and watch the full session by clicking here .