The economy may be stalling, and let’s think about why.
But first, here’s what’s happening. The nation added 120,000 jobs last month, the Labor Department reported this morning, some 80,000 less than economists expected. The number is probably a little less than needed to keep pace with population growth, which means that effectively jobs were lost.
The unemployment rate went down from 8.3 percent to 8.2 percent, but that was because fewer people are looking for work.
The jobs added is a severe drop off from the 200,000 – plus jobs that had been added every month since November, which signals that something’s wrong, and that some of the recent gains were due to the Christmas shopping help and mild weather in January that helped home builders.
And let’s be clear, in a recovery, 200,000 jobs a month ain’t great in the first place, and it won’t get us back to previous employment levels for many years.
Some of the jobs drop off is undoubtedly due to the problems in Europe and the high price of gas. But gas prices have been high for months, even when job growth was more robust.
But I’ll tell you one thing that did change in the last couple of months. The White House put out a budget that made clear Obama has no intention of seriously reigning in spending by leading on entitlement reform.
Trillions of dollars would be added to the debt AS A MATTER OF POLICY. Republicans have put forward a budget that does make a more serious stab at reducing spending, and they have been called un-American by the president of the United States for doing it.
The greatest peril to this nation, right up there with a catastrophic terrorist attack, is the debt. Americans know this. They are gravely concerned by it, and it affects their general outlook, and the performance of the economy.
They also know they have a president who is more concerned with solar panels than the debt. That’s what’s in his bones.
The White House remains in fantasyland. From Council of Economic Advisers Chairman Alan Kreuger:
There is more work to be done, but today’s employment report provides further evidence that the economy is continuing to recover from the worst economic downturn since the Great Depression. It is critical that we continue to make smart investments that strengthen our economy and lay a foundation for long-term middle class job growth so we can continue to dig our way out of the deep hole that was caused by the severe recession that began at the end of 2007.
With the deficit out of control, the White House continues to talk about spending – in case you missed it, that’s what “smart investments” are.
But the administration’s smart investments have not prompted a serious recovery. Unless Obama has an abrupt come-to-Jesus on the deficit, this economy may never take off.