A new jobs report shows the sickly American economy struggling to recover from the Great Recession. According to the Associated Press, America added an unimpressive 54,000 jobs in May; this after a three month average of 220,000 jobs added per month. The May figures leave the nation wondering: Is this simply a hiccup or an indicator of more trouble to come? But a closer look reveals that this recession is like no other in history, and the country may struggle to emerge from the economic wilderness.
Statistically, the United States is in the middle of a recovery. America’s GDP is at $13.5 trillion; actually above the nation’s total GDP in 2007 when the recession began. In fact, the National Bureau of Economic Research concluded the recession ended in June 2009. Yet, the average American does not agree with this assessment. According to an April Gallup poll, 55 percent of Americans still believe America is still in a recession or depression; 16 percent believe the economy is actually slowing down. What is different about this recession and recovery than past recessions?
Main Street is not feeling optimistic about the economy because America has developed two economies; one where business and production thrive, and another where jobs with decent wages have disappeared. Although jobs are being created, for the most part they are low paying service jobs. Fareed Zakaria, the well known columnist and CNN contributor, points out that most jobs being created are part-time and pay about $19,000. In addition, he states:
“Two years into the recovery, growth is about 2 percent and job creation has reached around 250,000 a month, which might sound high but is actually barely enough to keep pace with all the new workers entering the job market for the first time.”
Basically, GDP growth is not translating into job growth, but this is a new phenomenon. America must deal with a new reality: this recovery is different from past recoveries because America is no longer the same. Since WWII, many recessions have taken place. But there always seemed to be something around the corner to save the American worker.
War production for WWII pulled America out of the grips of the Great Depression. Immediately after WWII and the Korean War there were brief recessions, but Americans eventually churned out consumer goods with little competition from a war ravaged world. During the 1980 – 1982 recession, things were doom and gloom much like today. According to CNBC, the unemployment rate almost doubled, and reached 10.8 percent. President Ronald Reagan’s tax cuts created jobs as America recovered. What Reaganites fail to mention is that President Reagan tripled the national debt. The recession of the early 1990s dissipated as the internet boom created a new industry for Americans to work in.
America can’t look to the past for solutions to the current recession for a variety of reasons. America faces competition from industrial nations like China; nor can we look to war for job creation. Government spending similar to that of the Reagan years is not possible. The United States has hit its debt ceiling and Republicans seem unwilling to raise it without spending cuts. The inability to spend handcuffs the government from continuing to stimulate the economy. In addition, the U.S. tax burden is the lowest it has been in 60 years, according to USA Today. Further tax cuts are unrealistic. Finally, there seems to be no new “boom” in the near future. The Information Technology & Innovation Foundation (ITIF) found that out of 40 countries, America was last in improvement of its innovation capacity from 1999 – 2009.
Turbulence is part of our national history. As Americans, we think of ourselves as special; a nation that endures dire circumstances, but does exactly that, endures. This fundamental shift of the structure of our economy threatens our quality of life and preeminence in the world. There is no doubt we can prevail again, but how is the question we must answer.