There was good news on the national jobs front this week. The unemployment rate dropped .2% from 10.2% to 10%. I have long been a pessimist on the jobs front, and I remain one. A detailed analysis of the employment picture combined with a first hand knowledge of the small business climate makes me quite skeptical. The following is some information in an analysis piece from National Public Radio (The whole article can be found here).
The jobless rate usually sees a sizable drop during the economic recovery — and bigger recessionary spikes in unemployment are typically followed by larger declines during the first year of improving unemployment. So it would be no surprise if, a year after the unemployment rate begins to drop, it falls to the 9 percent range.
So, the authors expect unemployment to fall to, perhaps, 9% in the next year. I find this number very optimistic, but their job is to watch leading indicators and compare historic trends, so they certainly have a lot of credibility. I hope that they are correct. However, their further analysis is much more troubling.
If [the historic US job growth] pattern persists, the U.S. economy needs to keep expanding without interruption until 2020 for unemployment to fall to its pre-recession low of 4.4 percent. Should the next recession arrive earlier, as we suspect, it will take much longer. The implications constitute nothing short of a wake-up call for policy makers who promise to get job growth back on track.
In other words, if the US keeps following the same economic policies of over-regulating business, providing corporate welfare to protect large corporations at the expense of entrepreneurs, and over-taxing job creation, it could be decades (or maybe never) until we get back to 4.4% unemployment.
The world has changed. We can’t unchange it. We either adapt or fade away. As evidenced in Delaware by the Left’s 30 year attack on manufacturing and manufacturing job creation, it seems that they’d like to see us fade away — and they are winning. Or should I say that Delaware and the country is losing. Again to quote from the article:
The “great moderation” of business cycles once extolled by many economists, including Federal Reserve Chairman Ben Bernanke, is history. The trend rate of growth is shriveling. In other words, business cycles are back with a vengeance…
It is at least conceivable that either enlightened policy measures, or good luck, or both, will result in a decisive break from these patterns.”
I’m not a gambler (having never bet a quarter in a US casino), so I don’t want to just wait for “good luck”. I’m not seeing much in the way of “enlightened” policies from the General Assembly or Congress. It is certainly time for new leadership.