A resilient economy

A resilient economy

October 29th, 2011 in Opinion Times

There has been little economic news of late to cheer about, so Thursday's report from the Commerce Department that economic growth in the July-to-September quarter grew at an annual rate of 2.5 percent is especially good news. It indicates the nation's economic recovery has not flat-lined or edged closer to a double-dip recession, as so many Republicans want the public to believe, but is still moving forward -- and at the fastest rate in a year.

In fact, the third quarter growth rate was nearly double the 1.3 percent rate of the second quarter. Coupled with progress this week by the European Union toward resolution of its sovereign debt crisis and banking woes, the broad injection of good news spurred a surge in the Dow Jones Industrial Average, to above 12,200, where it remained perched Friday afternoon. At the moment, the Dow is on track to its biggest monthly percentage gain in a quarter of a century.

The most recent quarterly growth rate, to be sure, does not yet signal the likelihood of a resurgent job market. While the economy, bolstered by business investment, is better and more solid than it recently had seemed, it is nowhere near the more rapid rate of 4 percent growth-and-above that is needed to generate a marked increase in new jobs.

The slow-to-moderate growth in jobs, from 50,000 to 80,000 or so a month since the trough of 2009, is barely enough to meet the demands of an ever-growing work force. The lackluster job market, in turn, is aggravated by, and contributes to, a sense of economic uncertainty -- largely due to the loss of wealth in home equities in the housing plunge -- which compels aging baby boomers to defer retirement and hold on to their jobs, depriving more new hires. Thus unemployment continues to hover around 9 percent, leaving 14 million still unemployed or underemployed since the financial implosion of 2008 and the resulting tsunami of job losses.

Against this dynamic, the apparent underlying stability of the economy seems sounder that anti-Obama critics would suggest. Though most of the millions of jobs lost in the Great Recession cannot be reconstituted, Congress could spur faster job growth if Republicans were willing to move forward with President Obama's jobs package. His proposals to pay for infrastructure projects, to provide aid to states to keep teachers, firemen and police officers on their jobs, and to extend benefits to the long-term unemployed, all make good sense. And they could easily be paid for by a surcharge on the ultra-wealthy pending a rollback of Bush II's gratuitous high-end tax cuts.

The jobs program would boost consumer spending, stabilize the housing market, negate the cost of unemployment, and avoid the inherent bust of self-defeating austerity measures that further diminish economic strength and consumer confidence.

The issue now is whether Republicans are willing to work in a bipartisan way for the common good, instead of deliberately driving the economy down further and inflicting pain on working families just to fabricate an argument against Obama. The economy's resilience is apparent. But it still needs the help of sensible government measures.