“If there were ever a shot across the bow to this administration to get off its laissez-faire boat and start helping the economy, this is it,” said Sen. Charles Schumer, D-N.Y.
The health of the nation’s job market is critical in determining whether the economy will survive the stresses from housing and harder-to-get credit. The positive forces of job and wage growth have helped to cushion individuals from all the negative forces in the economy. The big worry is that people will clamp down on their spending and businesses will put a lid on investment and hiring, throwing the economy into a tailspin.
For all of 2007, wages increased 3.7 percent, down from a 4.3 percent gain in 2006. High energy prices, though, probably made some workers feel like their paychecks aren’t stretching as far as they would like.
To fend off the possibility of a recession, the Federal Reserve cut a key interest rate three times last year. Policymakers are expected to lower rates again when they meet at the end of the month. Some analysts are predicting a bold half-point reduction in light of the weak employment report.
The big question, said Stephen Stanley, chief economist at RBS Greenwich Capital: “Has the economy hit a big pothole or careened into the ditch?”
When I was in college 35-40 years ago, 5% was considered “full employment,” and a smaller fraction of the public was employed (women hadn’t yet flooded into the offices). Now it’s supposed to be a sign of recession. I think I need to start selling grips on E-Bay; a lot of people seem to need to get one.
#1, Boy, did you hit the nail on the head. I was finishing college during the same time period that you were in. To make it worse : in some areas the interest rates for financing houses were in the low double digits. In the times I was raised up to the age of 10 unemplyment was in the 10-15% range. God blessed us as a united family. My Dad held two jobs and somehow we made it. Of course we didn’t have some things that people nowadays call “necessary for the good life.” but we did have schools where teachers taught and mothers that sacrificed a few “luxuries” to be at home when we came in.
Much of our difficulty stems from having handed over to foreign manufacturers what was, and still is, the greatest consumer economy in the world– that of the United States. Thirty years ago, manufacturing for our own domestic market was touted as our best guarantee against depression and world-wide turn-down. A stroll through Target/Wal-Mart these days shows how the picture has changed. It’s hard for me to see how this hurtful imbalance can be offset anytime soon by increasing U.S exports, particularly of the type which create jobs and prosperity.