The BLS jobs report that hit this morning was…how to put it? Demoralizing? Particularly headed into a holiday weekend that's supposed to celebrate the American worker. As some commenters have already pointed out, that fact the U.S. economy added zero — yes, zero — jobs in August is both depressing and symbolic.
Depressing because it came in well under even worst-case scenarios produced yesterday by the likes of Goldman Sachs, which had anticipated a fairly demoralizing 25,000 jobs to be added (Take that, starry eyed Goldman optimists!). I guess you could throw up your hands and say, Well, at least we didn't drop into negative territory! The national unemployment rate stayed at 9.1 percent (and presumably, the California rate will stay stuck at 12 percent, with L.A. County above that at 12.4 percent — that data will come later in the month).
Symbolic because zero is zero. August was the month when the U.S. economy finally curled up in ball and decided it had had enough, after the debt-ceiling battle, the wild market volatility brought on by the debt crisis in Europe, a hurricane, and an East Coast earthquake. For me, the bleak icing on the gloomy cake came when the White House announced an economic outlook that has the unemployment number remaining above 6 percent until…wait for it…2017!
Mercy. Please, show some mercy.
Pundits like former Labor Secretary Robert Reich insist that President Obama needs to go big in his speech to Congress next week, in which he's expected to lay out a comprehensive jobs plan. And on the other side of the political spectrum, the GOP candidate klatch seized on the opportunity to argue that Obama's economic polcies have failed.
The political motivation for the President to swing big could actually be stronger than the economic motivation. The August jobs report was awful, but it just confirms that we're in low-growth mode. GDP growth of 1-3 percent over the next year isn't going to create the 130,000 jobs per month that we need to keep pace with new workers entering the market — and it certainly isn't going to generate the 300,000-plus jobs per month we need to hammer down the unemployment rate.
Economically, it's obvious that we're still repairing the damage done by the financial crisis and it could take a while. Politically, people are getting disgusted with Washington and are likely to demand action. The risk for both the Democrats and the Republicans is that voters could get so fed up that they'll throw everybody out.
When I look at this in the SoCal context, I see future unemployment that could be reduced to 8-9 percent but still exceed that pessimistic 2017 national rate of 6 percent. The same holds for the entire state — and this is with both Hollywood and Silicon Valley driving the economy. I'm confident that we can dig our way out of this hole. But we're going to need some serious innovation, at the level of transforming certain aspects of the regional economy, to make it happen.
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