It was originally expected that the number of new jobs would b3 85,000… less than the 100,000 minimum necessary to start correcting the unemployment burden. In reality, the new estimate is that the number is 117,000 which brings the unemployment rate from 9.2% to 9.1%.
How much better the situation gets in the next six months is unknown. A stand-off between Democrats and Republicans over raising the country’s debt ceiling poisoned the atmosphere for employers and consumers. Whether this new report helps them to bounce back is questionable.
Commenting from the White House, Council of Economic Advisers Chairman Austan Goolsbee said:
“While the better than expected report is welcome news, the unemployment rate remains unacceptably high and faster growth is needed to replace the jobs lost in the downturn.”
- Unemployment rate dips, economy adds 117K jobs (boston.com)
- Jobs Report Better Than Expected: Hiring Picked Up in July (themoderatevoice.com)
- An Extremely Giddy Austan Goolsbee Tells Jon Stewart: I Feel Bad Obama Has To Be Around The Folks In Washington (thenewspundit.com)
- Employers add 117,000 jobs in July, unemployment rate drops (usatoday.com)
- Relief: July report shows jobless rate slips (chron.com)
- Jobs Report Better Than Expected (coydavidson.wordpress.com)
Here’s a clip:
The story of 1937, of F.D.R.’s disastrous decision to heed those who said that it was time to slash the deficit, is well known. What’s less well known is the extent to which the public drew the wrong conclusions from the recession that followed: far from calling for a resumption of New Deal programs, voters lost faith in fiscal expansion.
Consider Gallup polling from March 1938. Asked whether government spending should be increased to fight the slump, 63 percent of those polled said no. Asked whether it would be better to increase spending or to cut business taxes, only 15 percent favored spending; 63 percent favored tax cuts. And the 1938 election was a disaster for the Democrats, who lost 70 seats in the House and seven in the Senate.
And then came World War II and the miracle occurred.
From an economic point of view World War II was, above all, a burst of deficit-financed government spending, on a scale that would never have been approved otherwise. Over the course of the war the federal government borrowed an amount equal to roughly twice the value of G.D.P. in 1940 — the equivalent of roughly $30 trillion today.
Had anyone proposed spending even a fraction that much before the war, people would have said the same things they’re saying today. They would have warned about crushing debt and runaway inflation. They would also have said, rightly, that the Depression was in large part caused by excess debt — and then have declared that it was impossible to fix this problem by issuing even more debt.
But guess what? Deficit spending created an economic boom — and the boom laid the foundation for long-run prosperity.
We don’t have a similar miracle waiting in the wings for us. In fact, our military is more than overspent and tired out after the decade of Iraq and Afghanistan. And we are broke!
The odds of the Repiglicans, who will be voted in to Congress by short-sighted middle- and lower-class folks, increasing our expenditures on jobs and government-financed recovery are minimal.
But it turns out that politicians and economists alike have spent decades unlearning the lessons of the 1930s, and are determined to repeat all the old mistakes. And it’s slightly sickening to realize that the big winners in the midterm elections are likely to be the very people who first got us into this mess, then did everything in their power to block action to get us out.
But always remember: this slump can be cured. All it will take is a little bit of intellectual clarity, and a lot of political will. Here’s hoping we find those virtues in the not too distant future.
And here’s hoping it doesn’t take a World War.
- Krugman: This Is 1938 All Over Again, And We Need Something Like WWII To Save Us (businessinsider.com)
- “Paul Krugman: 1938 in 2010” and related posts (economistsview.typepad.com)
Cartoon(s) of the Week: Where do Conservatives stand when it is time to extend Unemployment Benefits?
Here is Senator Sanders’ comments for this week:
I agree with him. If enough of us sign on with Bernie you’ll see how fast Obama comes to agree with him as well!
Now Time Magazine is telling us that the 401 (k) Retirement Plan was never meant to be our main retirement vehicle.
For 30 years, since it was created by Congress, the 401 (k) has been pushed on us from Human Resources Administrators and accountants… and now, with last year’s big recession starting many folks (and I’m in that bunch) lost tens of thousands of their retirement dollars and, subsequently, are not going to be retiring.
Is anyone pissed off about this? I know I am, since I lost a good third of my retirement money before I could move it to another kind of account. I’m two years away from needing it, and now it’s not there.
If you’re in the same boat I am, start by reading the Time article, Why it’s time to retire the 401 (k).
Here’s a clip:
In what must seem like a cruel joke to many, the accounts proved the most dangerous for those closest to retirement. During the market downturn, the 401(k)s of 55-to-65-year-olds lost a quarter more than those of their 35-to-45-year-old colleagues. That’s because in your early years, your 401(k)’s growth is driven mostly by contributions. You control your own destiny. But the longer you hold a 401(k), the more market-exposed it becomes. It’s a twist that breaks the most basic rule of financial planning.
Commenting on whether the USA will experience a “Lost Decade” as a result of recession, like Japan in the 1990s:
“There’s no way we’re going to tolerate a Lost Decade in this country. It’s a fantasy, because the House of Representatives has elections every two years. The country is not going to tolerate 10 percent unemployment indefinitely. People (in power in Washington) need to be aware of that. If they don’t take the opportunities now . . . someone else will.”
-James K. Galbraith, Economist.