Two reports out this morning tend to confirm what has been the trend for eight months. A slow economic recovery is under way, but employers have yet to take the emerging signs of improvement across a broad range of indicators as reasons to begin hiring in large enough numbers to make a dent in the gigantic pool of out-of-work Americans. That pool now contains 8.4 million, plus another 8.8 million underemployed, and millions of difficult-to-count "discouraged workers" who want jobs but have given up looking.
The Conference Board issued its report on the leading economic indicators, which shows a small uptick, continuing the trend of nearly a year.
A slow recovery is expected this summer, and economic conditions will moderately improve in the near term, the Conference Board said Thursday, reporting that the index of leading economic indicators rose 0.1% in February. ...
"Going forward, the big question remains the strength of demand," said Ken Goldstein, economist at the Conference Board, a private research organization that analyzes a broad range of economic data. "Without increased consumer demand, job growth will likely be minimal over the next few months."
“We don’t expect this to be an especially strong recovery,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, who accurately forecast the LEI increase. At the same time, “growth is still positive,” he said, and the index “is still consistent with a gradual economic recovery.”
If that sounds familiar, no you haven't mistakenly logged into a web site from October. The same sort of thing was being said then, too.
Meanwhile, the Department of Labor released its report on unemployment benefits. First-time claims and continuing claims were both down slightly, but continuing claims were slightly up, indicating a plateau in this metric, which has been moving in a relatively narrow range for months after dropping from the stratospheric levels of early 2009.
Bloomberg reported:
The economic recovery may be emerging but it looks to be a jobless recovery, at least so far. Markets were little changed in reaction to today's report which was accompanied by benign consumer-price headlines.
This news was consistent with that released earlier in the week by the Federal Reserve, which noted that the "labor market is stabilizing. Household spending is expanding at a moderate rate but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit."
It's also consistent with the news that while the overall economy will be doing far better by the end of 2012, the job market will remain short of full recovery even then. The noted doom-and-gloomers who made this sobering assessment? The White House's economic team of Tim Geithner, Christina Romer and Peter Orszag in testimony before Congress this week.
They praised the administration's efforts last year of preventing the Great Recession from turning into something far worse by, among other things, saving or creating 2 million jobs. It is, as they rightly pointed out, good to remember just how close to the precipice we were 15 months ago and, while they didn't mention it, what things would look like now if John McCain and Sarah Palin had somehow managed to persuade voters that they should run things.
Geithner, et al., predicted that about 100,000 jobs a month will be created on average in 2010, 200,000 a month in 2011 and 250,000 a month in 2012. That's obviously a vast improvement over the 330,000 jobs lost on average each month in 2009. But it's also strong evidence of a "jobless recovery." In a shallow recession, the predicted level of job creation would improve the situation in a hurry. But the losses during this recession have been huge. And the situation is unlikely to be helped significantly by the welcome but weak bill signed today by President Obama in hopes of accelerating job growth.
The Outlook
Here's the problem. The 100,000 per-month jobs gain in 2010 only keeps up with what, in the past, has been the increase of new entries in the labor force from population growth. In other words, it has in the past taken, more or less, 100,000-125,000 new jobs a month just to keep up. So creating 1.2 million jobs this year would be the break-even point. Some analysts say, however, that the 100,000 increase might be met by 100,000 retirements as the first wave of the baby-boom generation starts opting out of the labor force. If this pans out, then there would be an actual net gain of 1.2 million jobs.
Using this same scenario for the succeeding two years, and sticking with the government's own estimates, would give us a gain of 2.4 million jobs in 2011, and a gain of 3 million in 2012. Total three-year gain: 6.6 million jobs. Which, given the loss of 8.4 million, would leave us 1.8 million jobs short of where we were in December 2007. Which means that 60 months after the recession began, and 42 or months or so after most economists now think the recession technically ended in the summer of 2009, we would still be nearly 2 million jobs short of where we were when the downturn got under way.
To reiterate, this is not news from so-called doom-and-gloomers but from the Obama administration's own economic team. Perhaps they are being cautious, wanting to avoid what happened in early 2009 when they – and almost every private predictor – estimated the high point of unemployment would be 8%. Better not to promise too much and hope for better.
When the next monthly jobs report comes out April 2, there will be some understandable exuberance since it could show as many as 300,000 new jobs created in February and March. That will be good news, but it's certain a big piece of it will be temporary since 100,000 of those will be Census jobs that last only five to 10 weeks. Nothing yet hints at anything better than the estimate that Geithner, et al., are predicting.
As noted by many progressive analysts, what's really needed is a direct job creation program that puts to work millions of Americans in the public sector until the private sector comes back more strongly. Because, as The Wall Street Journal and others have argued, "about a quarter of those 8.4 million jobs eliminated since the recession began won't be coming back" at all. They need to be replaced. Until they are, the pain and suffering of long-term unemployment needs to be relieved.
That pain and suffering can last well beyond an economic recovery. As Mark Gaffney, president of the Michigan AFL-CIO, recently wrote, children whose parents are unemployed for an extended period are more likely to drop out of high school and less likely to go to college. Young people who begin their work lives in a time of long-term joblessness will earn less during their entire careers. Older workers who lose their jobs are at great risk of never again being hired at the same salaries. The societal damage can span decades.
None of that matters to either the obstructionists in the Party of No Way, No How or the faint-hearted among Democrats in Congress. One side hopes to benefit electorally from the chaos so they can get back to wrecking the middle class and making life even more comfortable for the Top 10%. On the other side are too many folks whose preferred policy approach is crossing their fingers when they don't have them stuffed in their ears.