The economy may be pulling out of recession but unemployment is still surprisingly high. Celebrations should be delayed

Mr Obama’s approval ratings, though high, are slipping. This, in part, is because the single most important economic benchmark, employment, remains grim, surprisingly so. Unemployment usually responds to economic growth in a relationship that was captured by an economist, Arthur Okun, in the 1960s. But it has risen more during this recession than most formulations of Okun’s Law would suggest.
If growth peters out again later this year, it will dash the expectations Mr Obama has done so much to raise by touting his stimulus.

SHOOT: We ought to prepare for a long period of contraction.

clipped from www.economist.com WHEN Barack Obama visited Elkhart, Indiana, in early February, a few weeks after his inauguration, it was a sombre affair. In the previous 12 months the area’s unemployment rate had more than tripled to 18.3 %. The president pleaded for the passage of a massive fiscal stimulus, insisting that “doing nothing is not an option.” By the time he returned to Elkhart on August 5th he was quite a bit sunnier. Local factories are “coming back to life”, he proclaimed. A few days earlier he had declared the economy to have done “measurably better” than expected. Mr Obama’s good spirits are well grounded: America’s recession appears to be coming to an end. On July 31st the government reported that real gross domestic product (GDP) contracted in the second quarter, but at only a 1% annual rate. Much of that decline reflected business’s determination to keep factories and workers idle and fill new orders out of existing inventory. Now, stocks are so depleted that production will soon have to restart.