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Tuesday, July 10, 2012 - Page updated at 04:00 p.m.
Coming to terms with economic doldrums
TWO sobering pieces of economic news should remind the country that it is essential to reset our thinking on money, jobs and spending.
Friday's jobless report showed that U.S. employers added only 80,000 jobs in June, not enough to improve the unemployment rate from 8.2 percent. Even more painful to consider is the "underemployment rate," which includes unemployed people who have stopped looking for work and part-time workers who want full-time jobs. That rate is at 14.9 percent.
The worst news came earlier in the week when The Associated Press released its survey of 32 economists, the majority of whom said they expected unemployment to stay above 6 percent for at least four more years. And world news supports their gloom. China's economy is slowing after a vast overbuilding of real estate. In Europe, a crisis of sovereign debt imperils the solvency of its commercial banks.
In such a climate, U.S. consumers, businesses and especially governments cannot assume that a bad jobs report is a fluke, and that the next month's jobless report or state revenue forecast will put everything right.
Four years of disappointment suggests that this recession is different. America is in the longest stretch of low job creation since the 1930s. If the economists surveyed are correct, this will continue, and jobs will fall short of the optimum until mid-2016, which is seven years after the economy began to recover from the crash of 2008.
Even this drab assessment assumes no new downturn. Ordinarily such an assumption would be safe enough; recessions tend to start when jobs are plentiful, markets are high, business is full of pomp and speculators are convinced of their genius. That is not the economy of right now.
But what ordinarily happens is not an infallible guide.
Look at the price of houses. They have spent most of the past four years coming down. Such a fall had not happened for three-quarters of a century, and an entire industry recently bet that it was impossible. It happened, and only now has the price of housing begun to painfully recover.
In this election year, candidates will be reassuring voters they know how to fix the economy, as if it were a broken faucet. Some of their ideas will be better than others, but people should not expect too much. Slow growth appears to be baked into the cake, at least for a while.
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