We had a pretty good job growth number of +227,000 for February. And the consensus seems broadly to be that the economy is back, and employment is on a sustainable upward track.
I’m not part of that consensus. I think (1) very short term: we are on an, at best, fragile path; (2) long term: recovery to acceptable unemployment numbers is going to take a sustained 10 years.
To begin with, that 227,000 jobs increase is welcome but small. This economy needs monthly increases of about 110,000 just to keep pace with an increasing population. So we cut into the “stock” of unemployed only by about 117,000. And we barely cut at all into long-term – greater than 26 weeks – unemployment.
But even this may not continue. We are highly likely to see a big falloff in U.S. economic growth in the next two years, as the full force of the austerity kick we are on hits us in the second half of this year. Merrill Lynch, for example, is projecting growth of 1.9 percent and 1.4 percent in 2012 and 2013. If this is what actually happens, the probabilities are high that unemployment will be where it is today or marginally higher at the end of this year, and through 2013.
Finally, under optimistic assumptions – that employment grows throughout the next decade at the fastest rate of the last decade – we will not reach full employment again until close to 2022. The reality is that we will not see this kind of economic growth and employment growth through the whole period – we never do – and the growth collapse, which I think we are likely to see this year and next, starts us off on the wrong foot.
A decade of experience such as this would be an economic, human, social, and democratic-system disaster. The early years of this disaster are already baked in; they are inevitable. But a full decade of this is not inevitable; serious policy focused on long-term economic growth could begin to change the trends.
Given the potential costs and risks to our system, you would think that this prospect would be a central theme of the presidential campaign. But no, the Republicans have decided that they want to focus on contraception. And the election machine of President Obama wants badly to present an American renaissance as the theme. The renaissance motif does not dovetail well with a “lost decade” worry. I know all the objections: Americans like optimism; Americans dislike “eat-your-brussel-sprouts” campaigns; we can deal with the problems after we are elected. I’ve heard all of them. But all of this means we are not debating a central national problem – a long period of high unemployment – during a presidential campaign.