Depending on your view of the inventory cycle, we are looking at a potential year-over-year swing in GDP in the first half of 2011 of around 5.4%, which becomes a headwind in the next 12 to 24 months. At best, we are looking at 0%-2% GDP growth for the next 12-24 months.

    What does all this mean for the consumer and the unemployment rate? Under a good scenario, it's going to be a hard slog of 1-2% GDP growth, which will prove to be inadequate to reduce the unemployment rate. Here's Orszag's rule of thumb on this: Take whatever the GDP growth rate is, subtract 2.5%, and divide by two to get to the percentage change in unemployment. So, to get a 1% reduction in the unemployment rate you need GDP growth of 4.5% for one year (4.5 minus 2.5 divided by 2).

    Given the GDP headwinds outlined on the call, it seems unlikely that the unemployment rate will improve meaningfully any time soon. This is particularly problematic for U.S. corporations levered to domestic demand.