Recession highlights need for new social safety net


About six months ago, Financial Times Columnist Martin Wolf predicted that the current recession would not be a normal one, and that it would test the U.S.'s social safety net.

More than 5.7 million lost jobs later, Wolf's prediction regarding the recession's uniqueness is looking (unfortunately and painfully) on the mark -- and he's not the only economist to point out the distinct pressures caused by the U.S.'s current pronounced recession, wrapped as it is in a financial crisis.

Former Fed Chairman Paul Volcker, in a speech a couple of weeks back, said the United States may have to live with a higher "natural" unemployment rate -- essentially a downgrade of what economists define as full employment. Whereas the old natural unemployment rate was 5.5 percent, the new level may be 6.5 percent or even seven percent.