Remember the "jobless recovery" of 1992 and 93? Well, this recovery isworse.
The only reason the official unemployment rate hasn't risen above 6 percent is because a lot of people have stopped looking for work, and if you're no longer looking, you're no longer counted among the unemployed.
In the past 22 months, since the recession officially began, American employershave eliminated a total of 1 and three-quarter million jobs. That's more jobs than were lost in the last recession. In fact, by 1993, employment had already picked up again. Not this time. Manufacturers have been cutting jobs now for 29straight months -- the longest period of manufacturing cutbacks since the GreatDepression.
You see the vicious cycle, here: More job cuts means more people afraid of losing their jobs. So they tighten their belts and cut back spending. They cut back spending and companies sell less. Companies that sell less have to cut costs, including jobs. And down it goes. This jobless recovery -- worse than the last jobless recovery -- could dip right back into recession, or worse.
The White House is using these worrisome job numbers to push its new economic plan. But just about everyone -- including White House officials, including card-carrying Supply-Side economists -- agrees that whatever this plan is, its primary effect won't be to stimulate the current economy.
Look, three things have to happen, and they have to happen soon. First, the Fedhas to cut interest rates again. I realize rates are already so low the Fed hasalmost run out of running room, but another cut is essential. Second, Congress has to pass and the President has to sign a tax cut that puts money directly into the pockets of people who will spend it, and spend it soon.
Now, I've been pushing a payroll tax holiday -- exempt the first 15 to 20 thousand dollars of income from payroll taxes for a year. Maybe there's a better idea out there. Whatever it is, do it. We're running out of time.
Finally, because this isn't just an American problem -- the slowdown is worldwide -- we've got to signal to the European Central Bank, the Bank of Japan, the Bank of England, and the International Monetary Fund that this is the time to put more money into circulation. The danger of global deflation is larger than the threat of global inflation. Having a coordinated response is better than placing the entire burden on the United States.
This economy is hurting, and so are a lot of people. Enough political posturing.
