October Jobs Data Better but Still Not Enough: Opinion
The unemployment rate increased to 7.9% last month from 7.8% in September.
In the weakest recovery since the Great Depression, most of the reduction in unemployment from its 10% peak in October 2009 has been accomplished through a significant drop in the percentage of adults working or looking for work. Were adult labor-force participation the same today, the unemployment rate would be 9.6%.
Adding more than eight million part-time workers who can't find full-time work, the unemployment rate becomes 14.6%. It rose above 14% when President Obama took office and remains stuck there.
Convincing millions of Americans they don't want a job or compelling desperate workers to settle for part-time work has been the Obama Administration's most effective jobs program.
Growth remained a slow 2% in the third quarter as consumers remained cautious, the trade deficit on oil and with China continued to drag on demand and businesses -- concerned about the fiscal cliff, the cost of Obamacare and the grip of regulatory and other anti-business policies -- slashed investment.
Prospects for substantially reducing unemployment remain slim. The economy would have to add about 12.6 million jobs over the next three years -- about 349,000 each month -- to bring unemployment down to 6%. Growth in the range of 4% to 5% is necessary to accomplish that.
Recent moves by China to further close its markets to stimulate its own flagging economy will worsen the trade deficit and weaken U.S. growth without a substantive response from Washington. Similarly, the financial crisis in Europe worries U.S. businesses about a second, even more severe recession and discourage new hiring.
It is simply not true, as President Obama has claimed throughout his campaign, the economy faces changes more daunting than any time since the Great Depression. Ronald Reagan inherited a similarly difficult situation -- unemployment that peaking at 10.8% in November 1982 and double-digit inflation and interest rates.
President Reagan put in place a very different set of stimulus measures -- emphasizing private-sector leadership -- and when he faced the voters in 1984 the jobless rate had fallen to 7.3%. During his recovery, GDP growth was averaging a brisk 6.3% in contrast to President Obama's 2.2%.
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 championed by President Obama do not address the 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% a year instead of the 5% pace that is possible after emerging from a deep recession and with such high unemployment.