The latest employment data indicate that the U.S. job market is in a holding pattern — the price we pay for a do-nothing Congress focused more on austerity than job creation.
Our economy added 69,000 new jobs in May, for an average of 96,000 over the past three months, with a downward revision of 49,000 for March and April’s data. While this pace of job creation is fast enough to keep unemployment from rising, it remains well below that necessary to bring our economy back to full employment anytime in the near future.
Look no further than Congress for the reasons why this is the case. Last year, Congress refused to put in place the American Jobs Act, which would have helped to reduce unemployment and create jobs. By not acting Congress and the states are instead cutting off the long-term unemployed from any additional benefits and shrinking government spending. While the private sector has been adding jobs for 27 months, for a total of 4.3 million jobs since February 2010, state and local governments have been shedding workers in most months since the fall of 2008, for a total loss 660,000 jobs. These layoffs are pro-cyclical, meaning that they are dragging down economic growth.
While important steps were taken several years ago to boost government spending as the U.S. economy spiraled into the Great Recession of 2007-2009, including the American Recovery and Reinvestment Act of 2009, in recent years cut-backs at the state and local level have cut spending so sharply that overall, government spending has grown very little. In the first quarter of this year, government spending fell by at an annual rate of 3.9%.
SOURCE The price of a do-nothing Congress – Outside the Box – MarketWatch.