Mediocre Jobs Report: Unemployment Steady, But Too Few Jobs Added
Prospects for substantially lowering the headline unemployment rate are slim, because so many folks who left the labor force would likely return if economic conditions improved.
Even through the recovery, household wealth remains well below its recession levels, and households once accustomed to two incomes, now getting along on one, will be increasingly challenged. Stagnant wages and stock market valuations have frustrated households efforts to increase savings and rebuild assets in the face of declining real estate values, and to adjust family budgets to fewer employed adults.
Were growth to pick up and the job market improved, given the state of household finances, the percentage of adults seeking employment could easily rise to pre-recession levels.
The economy would have to add about 13 million jobs over the next three years -- about 360,000 each month -- to bring unemployment down to 6 percent. Growth in the range of 4 percent to 5 percent is necessary to accomplish that.
Growth is weak and jobs are in jeopardy, because temporary tax cuts, stimulus spending, large federal deficits, expensive but ineffective business regulations, and costly health care mandates do not address structural problems holding back dynamic growth and jobs creation--the huge trade deficit and dysfunctional energy policies.
Oil and trade with China account for nearly the entire $600 billion trade deficit. Dollars sent abroad that do not return to purchase U.S. exports, are lost purchasing power. Consequently, the U.S. economy is expanding at 2 percent a year instead of the 5 percent pace that is possible after emerging from a deep recession and with such high unemployment.
Without prompt efforts to produce more domestic oil, redress the trade imbalance with China, relax burdensome business regulations, and curb health care mandates and costs, the U.S. economy cannot grow and create enough jobs.
Peter Morici is an economist and professor at the Smith School of Business, University of Maryland School, and a widely published columnist.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.