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There were two bits of bad news on the jobs front Wednesday. Seasonal hiring will only be slightly better than last year, when it was dismal. ADP's National Employment Report was even more discouraging. Instead of a gain of 20,000 private jobs in September, ADP reported a loss of 39,000. ADP does not survey government jobs, and its numbers have been significantly lower than those contained in the jobs report from the Bureau of Labor Statistics each month. Nevertheless, ADP and BLS track more or less along the same trend. Which means that the BLS report coming out Friday could be even more disappointing than it has been this past summer. Of course, there is always the possibility of a surprise.

The consensus is for a wash in the BLS report: a loss of 78,000 Census jobs and a gain of 85,000 private-sector jobs. That would be a slight improvement over the figures for August, but indicative of continued painfully slow growth in the job market 15 months after the recession has officially ended. Given that this will be the final jobs report before the November election, for which early voting has begun, the media message that emerges is not likely to be helpful to Democrats. According to ADP:

The decline in private employment in September confirms a pause in the economic recovery
already evident in other data.  A deceleration of employment occurred in all the major sectors shown in The ADP Report and for all sizes of payroll.  The September decline in employment followed seven monthly increases from February through August.  However, over those seven months, the average monthly gain in employment was 34,000.  There simply is no momentum in employment.

No momentum, indeed. In the eight months of 2010 reported so far, fewer new private-sector jobs have been created than were lost in January 2009. Hope of an acceleration keeps being transferred to next month's report. But while glimmers appear a couple of times a week - this time it was the ISM's higher-than-expected increase in the non-manufacturing index - the general tenor of opinion is that we're in for more of the same - at best, not enough job growth to keep up with the recent historical growth in the labor force of 125,000-150,000 a month. At worst, a drop into negative territory again.

Among other things, what this means is that what Andy Kroll calls the black hole of long-term unemployment has the potential to get deeper and darker in the months ahead as the so-called "99ers" lose their unemployment benefits.

At the Conference on the Future of Financial Reform in Washington, D.C., Tuesday, there was plenty of talk about where we should go next, which I'll discuss later in the week, but what caught a lot of attention were the words of Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc,, who suggested two near-term scenarios for the U.S. economy:

"Pretty bad, and very bad.” Under the “pretty bad” scenario, the economy would limp along and it would take “many years before full employment” returns. Under the “very bad” scenario, recession returns and the jobless rate would soar again, he said.

From a research note of Hatzius:

We see two main scenarios for the economy over the next 6-9 months—a fairly bad one in which the economy grows at a 1½%-2% rate through the middle of next year and the unemployment rate rises moderately to 10%, and a very bad one in which the economy returns to an outright recession. There is not much probability of a significantly better outcome.

Columnist Paul Krugman added a third option: "absolutely catastrophic."

Krugman said that “nothing very good is going to happen” in the economy in 2011, and suggested that high unemployment — which he defined as 7% or higher — could persist indefinitely unless Washington can find away around “political paralysis.”

Speaking as the (relative) optimist of the bunch, Martin Feldstein, a Harvard economics professor and a long-time adviser to Republicans, agreed that the jobless rate will remain high for a very long time, and suggested that a severe devaluation of the dollar might be the only way out of the trap.

Finding a way around the political paralysis in a year when Republicans will undoubtedly have more Representatives and Senators than they do now is a conundrum. The stimulus kept us from plunging over the cliff but didn't drag us back very far away from the edge. Tepid economic growth has not made what's going on  literally a "jobless recovery," but it's not far above that level, and the possibility of slipping into that realm remains significant.

But if direct-funding of jobs by means of a modern WPA and CCC was an impossible dream in 2009 and 2010 because "the votes weren't there," then 2011 will surely be no better with a reduced (or worse) Congressional majority. Even passing something as modest and sensible as Rep. George Miller's Local Jobs for America Act can't seem to be done. And if fixing the immediate crisis remains bogged down in unproductive palaver about deficits and tax cuts for the wealthy, what then can be expected when it comes to taking on the chronic underlying factors that have exacerbated the acute crisis?

There has been some welcome but carefully couched push-back recently against China's export-oriented currency manipulation.  But what's really needed is a complete rewriting of trade policy away from the neoliberal model.

The country also needs tough laws - with corporate incentives and disincentives - to deal with the off-shoring of jobs, laws far more effective than the modest legislation so far enacted into law or approved by the House but rejected by the Senate.

To reiterate for the zillionth time , the United States needs an industrial policy, just like every developed nation as well as China, India and Brazil operate under to strengthen their economies. An element of that industrial plan must focus on the effects of automation on the labor force.

America must stop deferring maintenance on our existing infrastructure and invest - heavily - in the new stuff. Among other things, that means spending at least as much as the $738 billion the Chinese plan to put into renewables over the next decade.  

Income taxes need to be restored to progressivity.

Policies should be developed to spur worker-owned businesses and other arrangements outside the current corporate model.

The power of corporations to keep workers from unionizing must be curtailed with the Employee Free Choice Act and other laws.

A sustainable economy, that is, an environmentally sound economy, with all which that means, should be the ultimate goal. Further delay on heading down that path will pay negative dividends in both the short and long runs.

None of these are new ideas, and none can be transformed into reality easily. Standing in the way are the oligarchs, the politicians who pal around with them and the ever-more untrustworthy megamedia, a plutocratic cabal that has more concentrated power in this second Gilded Age than the robber barons could imagine. Prying them off their perches will be no mean feat. But if we are to change our current state of affairs, it cannot be avoided.  

 

Originally posted to Daily Kos on Thu Oct 07, 2010 at 06:00 AM PDT.

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