December Job Growth: A Muzzle For The Uncertainty Pushers
Remember when every mainstream newspaper was warning about the uncertainty created by the fiscal cliff? I certainly do. Such scare stories ran almost every single day over the past six months in newspapers like The Washington Post, The New York Times, and The Wall Street Journal.
We were told that the negotiations on Capitol Hill over tax-and-spending policy were frightening businesses, leading to slower business investment and inevitably weaker job growth. As we learned today, however, those claims had almost no basis in reality, as job growth during the second half of the year was actually slightly stronger than job growth during the first half of the year.
Nonfarm payrolls increased by 155K in December, about in line with market expectations. In the first half of the year, the economy added an average of 146K jobs per month; in the second half, average monthly job growth totaled 160K.
155K jobs added per month is a pace of growth that is obviously not strong enough to put a dent in our country’s unemployment problems. If December’s pace of job growth continued indefinitely, it would take roughly another four years just to bring the unemployment rate down to six percent.
Job growth will pick up only when the experts running this country start to realize why job growth is so weak in the first place. Since the recovery began, there have basically been two opposing views: one that has attributed sluggish growth to emotional factors – our consumers aren’t confident enough, and our business managers are too uncertain! – and one that has attributed sluggish growth to the demand gap created by the housing collapse. In an objective world, today’s jobs report would put a muzzle on those who hold the former view. In reality, they will probably continue to make their case in the months leading up to the debt-ceiling deadline.
It is important that we do our best to strive for accountability. Those who have been pushing the emotional explanation for our economic ills have been wrong on almost everything in recent years. If their reputations weren’t tarnished for missing the housing bubble, which wrecked the economy and which remains the source of all our problems, then the least we can do is make sure that they receive the blame they deserve for ignorantly distracting everyone over the past six months with fairytales about uncertainty. Maybe then will we finally be in a position to create the demand needed to get people back to work.