07 January 2011

You Think?

But the economy also needs to add 100,000 to 125,000 jobs a month just to keep pace with growth in the labor force. That means the gap created since the recession started was closer to 12 million jobs (leaving 11 million after the gains in 2010). The U.S. unemployment rate is unlikely to move much lower if job gains continue only at December’s pace. Even employment gains close to October’s pace (210,000 jobs) would take us into the next decade before seeing the unemployment rate back near 5%.

Is it really a recovery if it’s jobless?

The real reason why any so-called “recovery” at this point in time is just a mirage is because there is no added production.  Sure, firms have become more efficient, which is great.  Unfortunately, there are 7.3 million people out of work, not producing anything.  Real wealth—and real recovery—are predicated on production, not consumption.  You do not become wealthier by taking away from what you have; you become wealthier by adding to it.  These 7.3 million people are not adding at all. Eventually, this inconvenient fact will come to haunt the American economy.

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