The financial crisis that gathered force from the summer of 2007 through the summer of 2008 and then exploded after the collapse of Lehman Brothers last fall did more damage to the economy than most forecasters had imagined. Last December, economists forecast 2009 unemployment at 7.8 percent. As of this writing, it seems likely to be 9.3 percent or higher—at least 1.5 percentage points higher than originally estimated. Year-2009 real GDP also looks to be lower than predicted—coming in at $11.4 trillion rather than the $11.53 trillion forecast by the Obama administration. Even without the downward revision of GDP, however, the next stretch of road bears all the marks of a jobless recovery.

Back in the 1960s one of President Johnson's economic advisors, Brookings Institution economist Arthur Okun, established a rule of thumb quickly named "Okun's Law." Here is the gist: if GDP (production and incomes, that is) rises or falls two percent due to the business cycle, the unemployment rate will rise or fall by one percent. The magnitude of swings in unemployment will always be half or nearly half the magnitude of swings in GDP.

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