Podcast: The January Employment Report and What It Means for the Economy
I’m Michelle Bazie and I’m here with Chad Stone, the Center’s Chief Economist to discuss January’s employment report and what it shows us about the state of the economy.
1. Chad, the most recent employment report shows that job losses have slowed significantly.
Yes, there were encouraging signs in the employment report -- the unemployment rate dropped unexpectedly to 9.7 percent in January and that’s under 10 percent for the first time since September 2009 and job losses have slowed to a trickle. But we are still left with a huge jobs deficit that remains the legacy of the longest and the most severe recession since the Great Depression
2. How big is this jobs deficit? How many jobs have been lost since the start of the recession?
8.4 million! That’s a huge number and much larger than in previous recessions.
3. Can you put that number into perspective about what it would take to get those jobs back?
The economy would have to create an average of 350,000 jobs a month for two years just to return to the level of employment at the start of the recession in December 2007— and even more than that to restore full employment, since the population and potential labor force are now larger. The Economic Report of the President released on February 7th expects job creation of 95,000 a month over the coming year.
4. Are there measures we can take to speed up the economic recovery?
The American Recovery and Reinvestment Act of 2009 among other things, provided extra weeks of unemployment insurance and subsidized COBRA health insurance coverage for unemployed workers and it provided fiscal relief to help states address severe budget shortfalls. But those measures are scheduled to expire before a strong recovery is really underway. For starters, it is vital that we act quickly to extend or expand those provisions.
5. The President recently released the budget for fiscal year 2011. What was included in the budget that would help the economy?
The President proposed $266 billion of additional temporary recovery measures to stimulate the economy. These measures include an extension of the Recovery Act measures I discussed – UI and COBRA. It also includes additional fiscal relief for states struggling with budget shortfalls. And it added $100 billion for new jobs initiatives. It’s important to note that these measures to aid the economic recovery are temporary and do not add significantly to the long-term budget deficit.
6. So once we’re able to see the light at the end of the tunnel, what should be done then?
Once a sustainable recovery is underway – and these temporary recovery measures are no longer necessary -- policymakers must restore fiscal discipline and reduce the budget deficit to sustainable levels in order to promote long-term growth and prosperity. But, too much deficit reduction too soon could derail the recovery and be counterproductive to these long-term goals.
Thanks for joining me, Chad.