Monday, June 4, 2012
Robert Reich on the Jobs Stall in the U.S.
The Obama administration is no doubt telling itself that there are five months still to go before the presidential election. In 2011 there was also a mid year slump but then later a recovery.
However Reich points out that the most recent statistics are not at all encouraging and show how fragile and weak the recovery is. For the first time in nearly a year unemployment has risen, from 8.1 to 8.2 per cent. While not large it is still in the wrong direction.
Even worse only 69,000 jobs were created when many more were expected. From December to February of this year an average of 252,000 jobs were added each month. Just to keep up with labor force growth 125,000 jobs are needed each month.
The problem claims Reich is that Europe is facing a debt crisis and the big Asian economies are experiencing slower growth.BRIC nations are also feeling the effect of the global slowdown. As a result U.S. exports are not growing quickly..
However Reich also blames U.S. corporations for sitting on trillions in cash as they refuse to invest because of economic uncertainty..They are not sure either that American consumers would purchase goods if they increased production. Further investment is just not worth the risk..
Cutbacks and attacks on labor means that many consumers do not have the means to increase consumption. Median wages continue to decline.While in May wages were up 2 cents from last year adjusted for inflation this is actually a decline.
While overall corporate profits are healthy in many cases it is because of keeping costs down often by cutting the number of employees. This however decreases customer base for other companies.
Complicating the problems further Federal stimulus spending has run out.Even worse state and local governments shed workers to reduce their deficits.
Reich does not prescribe a solution to the situation but notes that Romney and Republicans will crow that the numbers show that what is needed is Republican measures such as more austerity policies and tax cuts.. This is a recipe for making the situation much worse as Reich sees it...For more see this article.