The U.S. economy created 103,000 jobs in December. It needs to create about 125,000 just to keep up with the natural growth of the labor force. Do the math, as they say, and you see the extent of our problem.
So much for QE2 (that went to the stock market, here and in China, as hot money); so much for President Obama’s grovel-fest before corporate titans; so much for the turnaround promised by the November elections, or the tax deal, or…pick your bromide. Our problem transcends dogma, much less the conventional wisdom. The number of jobs created was well below the consensus forecasts.
The unemployment rate fell to 9.4 percent in large part because more people dropped out of the labor force. Some “260,000 people dropping out of the labor force, leaving the labor force participation rate at 64.3 percent, a stunning new low for the recession,” according to economist Heidi Shierholz of the Economic Policy Institute. “Incredibly, the U.S. labor force is now smaller than it was before the recession started, though it should have grown by over 4 million workers to keep up with working-age population growth over this period.”
So now we move forward in a strange new disconnect. Goldman Sachs excites a rising stock market by investing in Facebook, never mind putting your tax money at risk. Lots of new gadgets will be there to distract. GDP is rising, although still not nearly enough to make up for the huge output gap left by the Great Recession. The big banks are back to “normal,” the rich are richer and corporate profits are at a record.
And millions of Americans are out of work and a large cohort may be for many years. Will they just become part of the landscape?
The Atlantic has an interesting chart on how the Great Recession changed America. The changes aren’t done.
All You Need to Know About Priorities and Power Dept: Headline: “JPMorgan exec named new White House chief of staff.”
Today’s Econ Haiku:
Ferries, once our pride
Now a hole in the budget
What changed? Them or us?