Tags: Reich | Jobs | labor | employment

Reich: Jobs Aren't Coming Back Fast Enough to Help Economy

Monday, 12 Mar 2012 11:36 AM

Economist and former Secretary of Labor Robert Reich says that while the February jobs report may give President Barack Obama a boost, the jobs aren't coming back nearly fast enough to significantly reduce the nation’s backlog of 10 million jobs.

"That backlog consists of 5.3 million lost during the recession and another 4.7 million that needed to have been added just to keep up with the growth of the working-age population since the recession began," Reich writes in his blog.

"If the American economy continues to produce jobs at the good rate it’s maintained over the last three months, averaging 245,000 per month, the backlog won’t be whittled down for another five years — long after Barack Obama finishes his second term, should voters grant him another." 

Editor's Note: You Deserve to Know What Obama and Bernanke Are Hiding From Americans

Reich says that whether even that jobs recovery rate continues depends largely on whether consumer demand can be revived.

“Spending by American consumers is 70 percent of U.S. economic activity,” says Reich, now a professor of public policy at the University of California at Berkeley. “But so far, spending is anemic.”

American consumers have replaced worn-out cars and appliances, but little else, says Reich, who served in three national administrations and was a secretary of labor under President Bill Clinton. Wages are still falling, adjusted for inflation and the value of consumers’ homes – the single biggest asset for most – continues to drop.

“The major driver of the U.S. economy over the past several months hasn’t been consumer spending. It’s been businesses rebuilding depleted inventories,” says Reich. “Wholesalers increased their stockpiles again in February, bringing them up almost a quarter from their low in September 2009.”

“But businesses won’t continue to rebuild inventories unless consumers start buying again. big-time. And consumers won’t resume spending as they did before the recession until they’re far better off financially.”

The Inland Empire News reports that consumer spending in the U.S. rose less than forecast in January after little change the previous month, showing a lack of improvement in the biggest part of the economy. Purchases climbed 0.2 percent, while incomes increased 0.3 percent, according to Commerce Department figures.

Editor's Note: You Deserve to Know What Obama and Bernanke Are Hiding From Americans

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