Jobless Recovery? Is It Really a Recovery?

All this talk about a ‘jobless recovery’ really has me peeved. Truth is, when an economy that is as dependent on consumer spending as the US economy is not creating jobs, you have to wonder if there is really an economic recovery underway. I’d have to argue ‘no’. Ben Bernanke testified before congress over the last couple of days and has stated that although the economy is recovering, that the recovery may be one that is ‘jobless’.

This from Bloomberg on February 24, 2010:

Federal Reserve Chairman Ben S. Bernanke, in two days of congressional testimony beginning today, will probably face questions on how he plans to end the worst jobs slump since the Great Depression.

Unemployment “will be a big topic” when the Fed chief faces the Senate Banking Committee, Senator Bob Menendez, a New Jersey Democrat and a panel member, said in an interview. “How do we help small- and mid-sized businesses, because they’re the ones who are going to create the jobs? What is he going to do and the Federal Reserve going to do to help grow this economy?”

Also this from the same article:

“It sure looks like we are in the middle of a jobless recovery,” said Mark Gertler, a New York University economics professor. “Sluggish employment growth” after 2001 “in part reflected an unwinding of an extraordinary employment growth during the late 1990s. In the current recovery, credit market frictions and general uncertainty may be the main factor dampening hiring.”

The U.S. unemployment rate may average 9.1 percent in 2011 and 8 percent in 2012, according to economists surveyed this month by Bloomberg News.

From where I sit and the way that I see things, those numbers are optimistic. My take is near double digit unemployment for the next several years at a minimum. Bernanke statement that the economy is recovering is required political theatre and the term jobless recovery, in my opinion, is another way of saying that the economy is still poor.

My view is simple and straightforward – we cannot have significant economic recovery until the excess debt in the system is dealt with.

Securities offered through USA Advanced Planners (Member FINRA/SIPC). Advisory services offered through USA Wealth Management. USA Advanced Planners and USA Wealth Management are affiliated companies. The opinions expressed herein are those of the writer and not necessarily that of the above noted affiliated companies. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. The information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.

This information is education in nature and, therefore, is not intended to constitute investment advice and should not be interpreted as a recommendation to purchase, sell or hold a particular security. Prior to making any investment decision, the services of an appropriate professional should be sought as investment related recommendations are dependent upon the personal situation of each individual investor. Investing in market related securities involves a risk of principal loss