NCPA - National Center for Policy Analysis


December 4, 2009

Despite President Obama's jobs "summit" yesterday at the White House, job creation is fundamentally a private-sector process, and the private economy is experiencing a broad retreat from credit-driven spending, says columnist Robert J. Samuelson.

The recovery's vigor will determine whether unemployment declines rapidly or stays stubbornly high, and the recovery's vigor depends heavily on private business, says Samuelson. 

According to Mark Zandi of Moody's

  • Since last spring, the number of bank credit cards has dropped 100 million, about 25 percent.
  • Banks are tightening credit standards (partly in reaction to new credit card legislation designed to protect borrowers from rate increases) and consumers are canceling cards.

Obama can't be fairly blamed for most job losses, which stemmed from a crisis pre-dating his election.  But he has made a bad situation somewhat worse, says Samuelson:

  • His unwillingness to advance trade agreements (notably, with Colombia and South Korea) has hurt exports.
  • The hostility to oil and gas drilling penalizes one source of investment.
  • More important, the decision to press controversial proposals (health care, climate change and taxes) was bound to increase uncertainty and undermine confidence.
  • Some firms are postponing spending projects until there is more clarity; others are put off by anti-business rhetoric.

Unemployment of 10.2 percent is still below the post-World War II peak of 10.8 percent of late 1982 but, by other measures, the job market hasn't been this bad since the Great Depression.   The question is how quickly economic growth will absorb 8 million lost jobs and the roughly 1.5 million annual new workers, asks Samuelson?

Source: Robert J. Samuelson, "The Jobs Summit: Who Cares?" Newsweek, December 2, 2009.

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