Paul Krugman advises against undue exuberance.
So, about that jobs report: it was genuinely good, certainly compared with the dreariness that has become the norm. Notably, for once falling unemployment was the real thing, reflecting growing availability of jobs rather than workers dropping out of the labor force, and hence out of the unemployment measure.
Furthermore, it’s not hard to see how this recovery could become self-sustaining. In particular, at this point America is seriously under-housed by historical standards, because we’ve built very few houses in the six years since the housing bubble popped. The main thing standing in the way of a housing bounce-back is a sharp fall in household formation — econospeak for lots of young adults living with their parents because they can’t afford to move out. Let enough Americans find jobs and get homes of their own, and housing, which got us into this slump, could start to power us out.
That said, our economy remains deeply depressed. As the Economic Policy Institute points out, we started 2012 with fewer workers employed than in January 2001 — zero growth after 11 years, even as the population, and therefore the number of jobs we needed, grew steadily. The institute estimates that even at January’s pace of job creation it would take us until 2019 to return to full employment.
And we should never forget that the persistence of high unemployment inflicts enormous, continuing damage on our economy and our society, even if the unemployment rate is gradually declining. Bear in mind, in particular, the fact that long-term unemployment — the percentage of workers who have been out of work for six months or more — remains at levels not seen since the Great Depression.
What a buzz-kill. To quote Andrew McNair in 1776, he could depress a hyena.
But the simple fact is that Dr. Krugman’s prognostications and warnings have been, for the most part, right on for the last few years. The Obama stimulus package was not big enough or long-lasting enough — the money was all spent before the natural cycle of the economy was done being depressed — so there wasn’t enough momentum to get us over the top faster. And, as I noted on Saturday, you can bet that the Republicans in the House and Senate as well as the campaign trail are trying to figure out how to sabotage the recovery so they can campaign on the recession that they caused and prevented the president from ending.