published Sunday, July 17th, 2011

Unemployment and economic distress

Not since the Great Depression of the 1930s has unemployment in the United States remained so high for so long. Today, we are in our 29th month of unemployment above 8 percent.

So surely the last thing most Americans wanted to hear when the latest report on unemployment came out was that joblessness has risen again. After all, we have been told that the U.S. economy has been in a “recovery” for many months now. But with unemployment having gone up again in June, it is getting hard to distinguish the so-called “recovery” from “recession.”

Analysts thought the new unemployment report would show a big jump in job creation. But it showed the opposite. Joblessness was 9.1 percent in May, but it rose to 9.2 percent in June. Not nearly enough jobs were created to keep up with population growth, let alone to begin actually reducing the rate of joblessness.

Manufacturing hiring remained weak, and there were job losses in construction and financial services. Meanwhile, average work hours and hourly earnings both dropped in June, which means that even people who are fortunate enough to have jobs are hardly home free in this economy.

The unemployment figure would have been even worse, except that almost 300,000 Americans gave up looking for work in June and are no longer technically counted as jobless — though they clearly are. When those who need full-time work but can find only part-time employment are added in, the so-called “underemployment” rate jumped from 15.8 percent in May to an even more painful 16.2 percent in June.

“It’s just an across-the-board retreat,” Heidi Shierholz, an economist at the Economic Policy Institute, told Tribune Newspapers. She pointed out that the discouraging jobs report came on top of similarly bad economic news a month earlier.

“This is two months of really scary reports,” she said.

The latest report “raised doubts that the economy will rebound in the second half of the year after hitting a spring slump,” The Associated Press reported. In fact, respected analysts have already sharply downgraded their expectations of growth for the rest of 2011.

We can see why they would do that. By this point after the last three recessions that America went through, unemployment averaged only 6.8 percent — far lower than today’s 9.2 percent.

What makes these numbers more frustrating is that the Obama administration and the president’s Democrat allies in Congress are doubling down on the very policies that are making things worse.

The $862 billion stimulus that Democrats enacted in early 2009 to “create or save” jobs was supposed to keep unemployment below 8 percent, the administration said. That obviously didn’t work. And yet the president and Democrats argue that even more spending — and higher taxes — is the solution to our weak economy.

If all the government’s “stimulus” spending hasn’t worked over the past two years, why does the administration think that still higher federal spending now will turn things around and get people working?

What businesses — including the small businesses that provide so many of our country’s jobs — need is the assurance that Washington is not going to raise their taxes. That would let companies hire more workers without having to fear that a suddenly increased tax burden would take away whatever financial gains they might earn from expanding operations.

And what all our people need is for Congress to put a brake on the wasteful and often unconstitutional federal spending that is contributing to high unemployment and expanding our disastrous $14.3 trillion national debt.

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nucanuck said...

Until now, the US has always been able to grow its way out of economic downturns. Productivity growth came easily in an age of cheap energy. Most of our slowdowns were actually government engineered by raising interest rates in order to cool an over-heated economy.

This time things are so very different. The government has pulled out all the stops to try to avoid the economic tsunami headed our way. Interest rates have been forced below the rate of inflation, destroying wealth while hoping to spur job growth. An unprecedented amount of borrowed stimulus money has been thrown into the economy. None of the earlier successful remedies seem to work.

A combination of off-shoring and technological advancement have shrunk the total workforce and actually reduced permanetly many middle class jobs. Soaring energy costs have dragged down new economic opportunities. Income growth for most is non-existent.

The economy seems to have reached a point where growth may no longer be possible...a time when we will have to seek an equalibrium without growth. Because we have used growth to cover our economic indiscretions, and that avenue may no longer be available to us, adjusting to a no-growth reality could prove to be our greatest challenge.

In a no-growth economy, debt becomes very difficult to repay. Trying to imagine an America with little or no availability of debt, boggles the mind. Saving to buy a car? Saving to buy furniture? Saving to buy a house? Could that be in America's future?

We are facing permanent structural changes in employment, I fear.

July 17, 2011 at 11:03 a.m.
EaTn said...

As this boat we're all in approaches going over the raging water falls, it's about time our elected officials take off their elephant and donkey hats and put on their American hats. The country is about to sink into a catastrophy not seen since the Great Depression, and our elected officials are still putting partisan politics above the good for the country. The solution may well be thinking outside of their partisan boxes--like revamping the antiquated tax code for one.

July 17, 2011 at 4:03 p.m.
nucanuck said...

EaTn,

The tax code will most likely be revisited as we are going over those falls. At that point the scramble for money will be bi-partisan and that which is unthinkable today will happen in a flash. The howls will be audible from coast to coast, north to south, and include every single American with a loose dollar in his/her pocket.

Those now pledging no new taxes will be telling us about our patriotic duty.

Our libertarian friends will have a fit of the vapors. I doubt that we will like it much either.

July 17, 2011 at 4:58 p.m.
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