America’s long hard road to recovery

Click to view.

Under the Obama administration, the decline in U.S. jobs slowed and then reversed.  But growth in jobs falls short of what is needed.  As the chart (taken from the Zero Hedge web log), the United States would have to add 250,000 jobs a month just to get employment back to 2007 levels by election day 2012, and to catch up with the growth in the labor force by election day 2016.

The chances of this happening are small.  The federal government’s economic stimulus program is coming to an end, while state and local governments continue to lay off employees and cut back program.  The state and local economic depressant offsets the federal economic stimulus.

The economic slowdown in China, financial problems in Europe, the destruction caused by extreme weather, the continued decline in house prices, the continuing foreclosure crisis, the growing burden of student debt – all are brakes on the U.S. economy.

Because the economy was over-stimulated going into the recession, historic methods of economic stimulation haven’t had their expected effect.  I think the federal government should put people to work directly.  You say we can’t afford it?  There are nearly 14 million people who are willing and able to work, but are unable to find jobs, while there is an enormous amount of work that needs to be done.  Can we afford to waste their ability?

The lack of adequate job growth makes other problems worse.  President Obama wants to reduce the federal budget deficit.  But having nearly 14 million people out of work, many of them collecting unemployment insurance and none of them paying taxes, makes the budget deficit worse.

Another major contributor to the federal budget is the enormous level of U.S. military spending.  But if the government were to cut back on defense contracts and reduce the size of the U.S. armed forces, this probably would add a couple of percentage points to the unemployment rate.  The Clinton administration reduced federal government employment during a period of overall job growth.  It would be hard to do the same thing under current conditions.

Click on US Has to Create 250K Jobs a Month for 66 Months to Return to December 2007 Unemployment By End of Obama’s Second Term for the original version of the chart in context on the Zero Hedge web log.

Click on Is the slowdown temporary? for an economic forecast from the Calculated Risk web log.

Click on It’s time to panic and Making work for ideas for putting people to work by Fred Clark of Texas on his slacktivist web log.

Click on Direct Job Creation: Why? Why Not? for ideas for putting people back to work by Jared Bernstein of the Economic Policy Institute on his On the Economy web log.

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One Response to “America’s long hard road to recovery”

  1. David Damico Says:

    Phil, thank you for this timely article. Since I am one of the 14 million willing but unable to get work, at the very least, I do not feel alone…although at times, I really do. It’s because I can only see the productive people, walking around, driving trucks, etc. I do not see the unemployed unless I go to a networking meeting. Then I see a roomful of mosly middle aged people highly skilled but with no way to use their skills.

    Like

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