By most estimates the report on December unemployment could hardly have been worse. Many experts believe that 500,000 jobs would be lost and that unemployment would rise to 7%. The actual figures came in at 524,000 and 7.2%.
But, the disaster may be in large part what saves the economy.
The great enemy of stopping the frightful fall in employment, the catastrophe of corporate earnings, and the plunging housing market is that time is not on the government’s side. That is an observation which has almost been made too often.
If Nobel Prize winner Paul Krugman and other leading economists are right, the federal government has less than two months to get a huge economic stimulus package into the market place. There is still debate about whether it should focus on building infrastructure, creating jobs, keeping mortgages from default, or cutting taxes. Which of those is the best path is impossible to determine beforehand. It may be that it will never be entirely clear exactly what hurt or helped the economy. Debate still rages on the reasons American got into and out of the Great Depression.
Congress and the Administration are concerned about the economy but the panic and the adrenaline rush which accompanies have not hit with a full force. The prospect of another 524,000 people being put out of work in just 30 days and the likelihood that the situation will only get worse as industries from retail and automotive cut more people may be the only thing that drives an admittedly imperfect set of bills though Congress, to the President’s desk, and into the bureaucracy that must implement the programs.
The debate over which direction a stimulus package should go is a debate over perfection. Everyone involved has a strong idea about which measures are flawed and which will work. These are randomly colliding like pinballs now and there is not enough incentive to take a course, steer by it, and hope that it will be close to the right decision.
The jobs reports was awful, but the sight of the gallows focuses the mind.
Douglas A. McIntyre