Phrases like "jobless recovery" and "double-dip recession" have been on the lips of politicians and pundits for months now, and the latest unemployment numbers may do little to quell such worries. The newest Bureau of Labor Statistics figures, released today, showed unemployment remaining painfully high, inching up in August to 9.6 percent from 9.5 percent. However, economists said a modest rise in private payrolls last month is a sign that the economy is on the mend, though just barely.
Both the Obama Administration and mainstream economists say that the country is in for, at best, a long, slow recovery in the employment situation and the broader economy. Employment is typically a lagging indicator of economy recovery, and this is particularly true at a time when employers are reluctant to hire because of concerns about a potential double-dip recession.
“The hard truth is that it took years to create our current economic problems, and it will take more time than any of us would like to repair the damage,” President Obama said this morning, commenting on the latest economic data.
At this morning's remarks in the Rose Garden, Obama stressed that the country is seeing growth, however slow. "The key point I'm making right now is that the economy is moving in a positive direction. Jobs are being created," he said. However, he added that "we still have a long way to go before the economy is generating all the jobs we need for the labor force."
In a briefing at the Treasury Department, Assistant Secretary for Economic Policy Alan Krueger said that while private sector job growth exceeded expectations, "the pace of job growth...remains below what we would like."
August's small unemployment uptick belies a complex situation, in which real signs of growth are visible. The one-tenth of a percent increase represents a net loss of 54,000 non-farm payroll jobs. However, this job loss was expected, as a result of 114,000 workers finishing their temporary Census jobs. Private payrolls, in contrast, increased by 67,000 in August. Krueger pointed out that private sector jobs have increased for eight months in a row, and that a total of 763,000 jobs have been added during that period.
Other recent unemployment figures bolster the claim that the job situation is improving. In the week ending August 28, there were 472,000 initial jobless claims, 6,000 fewer than the week before and 32,000 fewer than the week before that.
Such reassurances of slow growth provide little comfort to the 14.9 million unemployed and 1.1 million discouraged workers in the United States. Alongside July's record drop in existing home sales, as well as the weak gross domestic product growth of 1.6 percent in the second quarter of 2010, economists and policymakers are worried about the possibility of another slide into recession.
However, Gary Burtless, a senior fellow in economic studies at the Brookings Institution, thinks that widespread worries about a "double-dip recession" are overblown. "I still don't think that we're going to have a double-dip recession," he says. "I personally think that the odds are 3-to-1 or 4-to-1 in favor of economic growth."
Yet he adds that, Americans are experiencing frustrated expectations about the speed of recovery, particularly in the area of employment. "Many of us hoped, I think, that because the job market downturn was so severe that the bounceback would also be commensurately rapid," he says.
Martin Evans, a professor of economics at Georgetown University, agrees that the labor market is now seeing a normal, if frustrating, recovery from a devastating crisis. "I think the bottom line in all of this is that realistic expectations should not be that unemployment is coming down anytime soon, and it's going to bobble around for a while," he says.
Rather than wait for those "bobbles" to turn in a more decidedly positive direction, the administration is hoping to help accelerate job growth. President Obama today urged the Senate to pass a pending small business jobs bill that would provide some help to the economy. The bill, stalled by Republicans before the August recess, would increase loan availability for small businesses.
However, Burtless downplays that bill's importance within the larger economic picture. Burtless points to tax cuts instituted by President George W. Bush, which expire at the end of 2010. Republicans want to extend all the cuts, saying it is the wrong time to raise taxes and risk undermining the recovery, while Obama and the Democrats want to let the tax cuts expire for the wealthiest income earners, in part to rein in the federal deficit. "What the Congress and the administration agree to do about taxes for the general population will be a lot more important" for general economic recovery, said Burtless.