Although the federal government reported zero net job growth in August, the dismal unemployment picture extends beyond poor month-to-month news, according to a top Washington economist. The nation’s unemployment rate is not expected to fall below 8 percent until mid-2014, and that will require serious attention of Washington policymakers, says Chad Stone, chief economist at the Center for Budget and Policy Priorities, an independent think tank.
The Labor Department on Friday reported that U.S. employers added no net new jobs and the unemployment rate remained locked at 9.1 percent. Economists see the U.S. economy having now essentially flatlined to the point where it could well tip back into recession.
“To date, policymakers have focused far more on the budget deficit than the jobs deficit. Today’s report demands that they shift their attention more to the jobs deficit even while they continue working on policies that will address the long-term fiscal challenge,” says Stone.
Stone notes that President Obama next week is set to outline his proposals to spur job creation and economic growth, while acknowledging that “the political climate for meaningful action remains daunting,” given the intransigence of congressional Republicans against supporting new economic stimulus.
In a statement, Stone also cites data from the nonpartisan Congressional Budget Office (CBO) projecting the national unemployment rate would not fall below 8 percent until mid-2014 and, even with a projected sharp drop thereafter, would not reach 5.2 percent — CBO’s estimate of full employment — until early 2017.
“The situation cries out for additional policies to give the sluggish economic recovery a boost,” he says. “Those would include extending for another year the additional weeks of unemployment insurance and the payroll tax cut scheduled to expire at the end of this year; additional infrastructure investment, such as the Fix America’s Schools Today program (FAST!), that increases the country’s long-term productive capacity while boosting economic growth and job creation in the short term; and federal assistance to states, which continue to enact job-killing budget measures to satisfy their balanced budget requirements.”
The joint congressional “supercommittee” that the recent debt-limit agreement established has the authority to meet its deficit reduction target for the next 10 years by allowing additional spending and tax cuts to boost the economy and create jobs in the first few years, offset by a sufficiently large balanced package of revenue and spending measures to take effect in later years when the economy is stronger, Stone says.
“That would be a real contribution to the debate over how to create jobs,” he says.
Scott Nance is the editor and publisher of the news site The Washington Current. He has covered Congress and the federal government for more than a decade.