We're Still Stuck in the Economic Wilderness

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Rex Nutting

Sept. 3, 2010, 12:01 a.m. EDT · Recommend (3) · Post:

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By Rex Nutting, MarketWatch

WASHINGTON (MarketWatch) -- With millions of people twiddling their thumbs waiting for a job, the Land of Opportunity is in danger of becoming barren.

Nearly three years into our economic wilderness, we still can't seem to find our way out.

Fifteen million Americans are looking for work, and most of them know the job they once had is gone for good. Millions more are working, but need something better than part-time hours or a dead-end job.

The official unemployment rate is stuck near 10%, and even our best economic minds say it'd take a miracle to bring it down to even 7% in the next two years.

We lost about 8.4 million jobs during the Great Recession, and have regained only about a half million during the sputtering recovery. Counting the people who've come of age since 2007, we're more than 10 million jobs short of what we should have.

Behind every one of those 10 million is a human tragedy.

Jobs. Everyone talks about them, and but no one has done anything effective about them.

Employment is our biggest economic, social and political problem. And no one has yet proposed a solution that's workable, one that's economically effective and politically viable.

Rep. Christopher Van Hollen, who heads the House Democrats' campaign committee, tells MarketWatch's Rob Schroeder that passing a business-lending fund is a top goal and admits Republican voters are more motivated at the moment.

Plenty has been done; it just hasn't been enough to bring back the jobs we need.

The Federal Reserve has done its best to restart the financial system so credit can flow again. Interest-rates are at rock-bottom, and most of the impaired credit channels have been cleared. Credit is only a trickle of what it once was, because both lenders and borrowers are still repairing their finances from the excesses of the bubble.

There are some members of the Federal Reserve's policy committee who believe more help may be needed. The Fed could buy more Treasurys from the public in exchange for cash that would be spent (stimulating demand) or invested productively (stimulating supply).

A majority of the Federal Open Market Committee, however, thinks such a policy would be ineffective or even counterproductive. Their minds could change, of course, but as of now, there is no political will at the Fed to do more about job growth.

Fiscal policy has also been tried. The tax cuts, direct aid and infrastructure spending in last year's stimulus bill boosted total employment by an estimated 1.5 million to 3 million.

Even under the most favorable estimates, the stimulus only filled about a fourth of the employment gap. The private-sector was supposed to pick up the slack, but it hasn't.

Didn't we just watch this movie? A fire breaks out on a Gulf of Mexico oil rig, sending the crew leaping into the sea while folks on the mainland await word of an environmental calamity.

5:11 p.m. Sept. 2, 2010 | Comments: 3

Good article, Rex!"Jobs. Everyone talks about them, and but no one has done anything effective about them."And especially not in D.C. -- banks and international corporations were put first, and for the common people nothing was left. "And no one has yet proposed a solution that's workable, one that's economically effective and politically viable."That's not *that* difficult..."

- no.juice | 11:21 p.m. Sept. 2, 2010

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"Follow our ETF Investing blog by John Spence @mktwspence" 1:54 p.m. EDT, Sept. 2, 2010 from MarketWatch

"New column by @dcallaway; Mrs. Watanabe corners global currency market http://bit.ly/dAvFxl" 1:16 p.m. EDT, Sept. 2, 2010 from MarketWatch

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