Martin Feldstein has a new article in the Financial Times outlining the dismal jobs numbers:
The US unemployment rate reached 9.2 per cent in June, up from 8.8 per cent in March of this year and double the 4.6 per cent rate in 2007 just before the recession began…To bring the unemployment rate down to 8 per cent by the time of the November 2012 election would require employment to rise by more than 200,000 jobs a month, more than four times the rate of job growth in the most recent two months.
In fact, the reality is worse than official statistics:
[A]bout 3m Americans who would like to work but cannot find jobs are not officially counted as unemployed because they have not looked for work in the past month. And there are another 9m employees who would like to work full-time but are only able to get part-time work. Add together all of this and we find 29m Americans who cannot find the full-time work they want, a number equal to almost 20 per cent of the labour force.
Another sign of the dismal labor market figures can be seen in the following from from the New York Fed, showing that America’s labor market has increasingly started to resemble that of sclerotic Europe:
However, Feldstein is confident that appropriate policies will get labor markets back on track. America’s labor markets are more flexible than those in Europe; taxes are lower; and the minimum wage is lower as well:
The US unemployment rate will come down when the government in Washington develops policies that encourage business investment, housing construction, small business hiring, stronger exports and other increases in demand. Unfortunately, it does not look like the Obama administration has a strategy for achieving any of that.
Despite successive rounds of stimulus programs and an aggressive legislative calendar, the labor market situation remains dire. As this graph shows, the unemployment rate remains stubbornly above the worst-case predictions of White House policymakers, and is not moving in the right direction:
At 9.2%, unemployment is now over 2.5% above Administration projections. It has only climbed below 9% for a handful of months in the last couple of years. And there doesn’t seem to be any coherent plan in making these figures improve.