Summers on Unemployment Rate: ‘I Don’t Think Anyone Fully Understands This Phenomenon.’

If you thought the brouhaha over this morning’s Coast Guard training exercise was not reassuring, Larry Summers, director of the President’s National Economic Council, will put your mind at ease:

What made Summers’ frank comment important is that it suggests this just-add-gas relationship may now be malfunctioning. The American economy has been shedding jobs much, much faster than Okun’s law predicts. According to that rough rule, we should be at about 8.5% unemployment today, not slipping toward 10%. Something new and possibly strange seems to be happening in this recession. Something unpredicted by the experts. “I don’t think,” Summers told the Peterson Institute crowd – deviating again from his text – “that anyone fully understands this phenomenon.”

Unemployment keeps increasing, and our top economic guys aren’t sure why.

Also from that Time article, a forecast I actually don’t agree with:

We’re a long way from Hoovervilles, of course. But it’s not hard to imagine, if we’re not careful, a country sprouting listless Obamavilles: idled workers minivanning aimlessly through overleveraged cul-de-sacs with no way to pay their mortgages, no health care, little hope of meaningful work and only the hot comfort of angry politics.