I see a lot of the wire reports on the lousy jobs release focusing on Europe, China, and other external factors to explain why employment growth once again appears to have decelerated.
Sure, European instability and a slower growing China are part of the problem. But they are not at its core. For that, we’ve simply got to look in the mirror.
The economic reason the job market is once again downshifting is because we as a nation failed to take out recovery insurance in the form of temporary stimulative fiscal policy against precisely the situation we now face.
The President proposed the American Jobs Act back in September of last year for just this reason. The economy in general, but especially the job market, has never reliably achieved “escape velocity,” i.e., consistently high enough growth rates that would set off the virtuous growth cycle of more jobs leading to more incomes, more consumption, which feeds back into greater demand, more jobs, etc.
And the thing that has blocked us from taking out the insurance we needed was and is political gridlock. In fact, it’s worse. Beyond gridlock, dysfunctional Congressional politics have led to self-inflicted wounds to the economy, wounds that are being freshly reopened with talk of going over the fiscal cliff, another debt ceiling fight, and the loss of extended unemployment insurance benefits for hundreds of thousands of jobless persons.
When politicians come to Washington not to solve our immediate pressing problems, not to compromise, but to promote, above the public interest, a narrow political agenda–when they do so regardless of the degree of hardship in the current economy…then I’m afraid we shouldn’t be surprised at our inability to self-correct.