Newsweek: "Jobs Are on the Way! The nattering nabobs of negativism are ignoring the facts."

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Mon Dec-14-09 01:18 PM
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Newsweek: "Jobs Are on the Way! The nattering nabobs of negativism are ignoring the facts."

Jobs Are on the Way!
The nattering nabobs of negativism are ignoring the facts.

By Daniel Gross | NEWSWEEK
Published Dec 12, 2009
From the magazine issue dated Dec 21, 2009

Pessimism about the U.S. economy has reigned for most of 2009. Pundits on both the left and right have held that the programs enacted to bring the financial system back from the brink wouldn't—and couldn't—work. They have been wrong. The Troubled Asset Relief Program (TARP) would be a classic example of throwing good money after bad. (Bank of America, recently a basket case, just paid back $45 billion in TARP funds—with interest.) The stimulus passed in February was way too small to halt the economic decline. (Actually, it has short-circuited the recession.) The most unexpected event—aside from the stock-market rally that began in March—was the economy's shift from shrinking at a 6.4 percent annual rate in the first quarter to expanding at a 2.8 percent rate in the third quarter. "This growth has been better and stronger than we expected, than anyone expected," says Treasury Secretary Timothy Geithner.

Skeptics are now focused on the next big economic problem we face: unemployment. True, the numbers have been dismal. We've lost 7.2 million jobs, and unemployment in November was 10 percent. For African-Americans, the rate was 15.6 percent, and more than one in four teens are out of work. Economists believe the unemployment rate will persist at 10 percent through 2010. After the previous recession ended in November 2001, companies slashed payrolls for 17 of the next 21 months.

But jobs are on the way, and sooner than you think. Not enough to make everybody happy, of course, or to reach anything approaching full employment. But the data suggest that the economy, now growing at a rate above its historical trend, may be creating more jobs than are being lost. Companies shed only 11,000 payroll jobs in November—the smallest drop since late 2007. For the past three months, the government's first estimate of job-loss figures has been high; when the November numbers are revised, there may be a job gain. Labor-market recoveries are always a lengthy four-step process. First, as businesses stabilize, they fire fewer people. First-time unemployment claims are still elevated, but the four-week moving average is 474,000, the lowest in more than a year. Second, when demand begins to pick up, businesses prod existing workers to work harder. Which is why we've just witnessed the fastest two-quarter productivity surge since 1961. Third, when growth persists, bosses give part-time workers more hours or bring on temporary workers. In November, the economy added 52,000 temporary jobs, the largest addition since 2004, and retail hiring for the Christmas season is up 37 percent this year.

The final step—adding full-time positions—is happening now. Services account for about 86 percent of jobs. And it's here, not in the shrunken housing and finance sectors, where the employment recovery is taking hold. The Bureau of Labor Statistics said that the service sector added 58,000 jobs in November, the second straight month of growth. Among the new service workers are the 240 employees of the Elysian, a 188-room luxury hotel that opened Dec. 9 on Chicago's Gold Coast.

(more)
http://www.newsweek.com/id/226493