Nine/Twelve Long Years

We added 160,000 private sector jobs in October (151,000 total), the 10^th consecutive month of private job growth. While too much of that employment is seasonal (read: January could be a disastrous month for unemployment statistics), at least we are moving in the right direction. But experts tell us that to get back to where we were in 2007, we need nine years of continuous job growth – adding an average of 250,000 new jobs a month – and we are a long way from remotely reaching that level of sustainable growth. At 208,000/month, make that 12 years. It’s not just about bringing folks back to work; it’s also about absorbing those younger demographics that are joining the job market.

Indeed, America is looking more and more like Japan where young people can’t seem to find that initial “job for life” and cling to their parents for many years past the time when they should be operating as independent adults. In our own country, for example, law and business schools – churning out post-undergraduate professionals with impossible-to-repay student loans – a training young people for jobs that are turning more into paralegals and part-time sales people, where work is available at all. What exactly will the long-term impact of such incredible levels of “job frustration” be for this nation? And if government cuts spending under the conservative “austerity” mandate from the mid-term elections, and if consumer demand is still wobbly at best, exactly what is going to cause the private sector to begin to approach t he 250,000 per-month new job growth level we need to right this damaged ship?

Unemployment rests at the same 9.6%, but the alternative measurement – adding folks who want full-time work getting only part-time or occasional employment or those who want work but have given up looking – falls to an horrific 17%, well into the mid-twenty percent levels for certain regions of the United States. And exactly how are lower taxes and deregulation (which got us into this economic mess) going to have the slightest impact on job creation?

The only stimulus in town appears to be the $600 billion that the Federal Reserve is willing to pump into the economy to absorb some of the lower-valued instruments carried on the books of many financial institutions to free up the credit markets, but even economists who support the move think it’s too little, too late and is unlikely to create new jobs anyway. The November 5^th New York Times puts it this way: “The latest numbers underscore the challenges that lie ahead for Washington with a newly divided government and calls by Republican leadership to discredit Mr. Obama’s economic policies. Economists themselves cannot agree about what kinds of policy measures would rescue the job market. Even if a magic-bullet jobs program existed, however, it seems unlikely that a gridlocked Congress could cooperate long enough to put it in place.

“Moreover, the policy measures that remain — in particular, the Federal Reserve’s decision this week to pump more money into the economy — seem to be upsetting the rest of world. One effect of the Fed’s actions is to drive the dollar lower against other currencies, making American products more competitive and perhaps laying the groundwork for asset bubbles elsewhere. The lead-up to the Group of 20 summit meeting in Seoul, South Korea, … has been dominated by criticisms of the Fed’s announcement and battle cries over ‘currency wars,’ prompting the Fed chairman to defend the action on [November 5^th].”

Absent consumer demand and some really cool new businesses created to spur growth, it seems that we will be mired in this malaise for a very long time, mirroring Japan’s decade-plus descent into a moribund and depressed economic world. The President has visited several Asian nations in an effort to sell American products overseas, and Asia is one of the few growth areas where such buyers exist, but everyone is making the same trip. Without that job growth, without restoring the credit markets to a vastly higher level than they are now, housing prices may resume their fall as a plethora of foreclosed homes further depress the normal flow of new and previously-owned homes, which in turn will further tank the construction sector.

In the end, Americans are still looking for that elusive “quick fix,” but as time will probably tell, neither Republicans nor Democrats have the remotest chance of righting the ship absent the passage of much more time than the American body politic is willing to tolerate. The vacillation of contradictory policies may in fact create additional economic instability that will extend our crisis and make the American dream seem more like a distant memory.

I’m Peter Dekom, and our leadership has succumbed to political sloganeering at the expense of explaining the real issues to the American public and dealing with reality.