Is it possible to have a jobless recovery? Almost daily, we are confronted with discussion of this almost oxymoronic idea. Every media source is steadfastly weighing in on the nebulous and confusing idea of the economy improving while unemployment either increases or fails to decrease.
The underlying support for economic recovery comes from the Wall Street indexes such as the DJIA and the S&P 500 which have increased over 45% in the past year. If you are a believer in the concept that the market mystically forecasts future economic activity, then chances are you might be a proponent of the jobless recovery. Investment profiteers justify the revival by referencing historic records which seem to indicate that increased employment will follow the rise in the Wall Street indices. And, let us not forget that our government supported this argument when it announced the official end of the recession indicating a 5% growth of the GDP in the fourth quarter of 2009. After all, how is it possible our government, the “hidden hand” of the market and the investment geniuses who created the catastrophe can all be wrong in asserting the crisis is over?
On the other hand, there are skeptics who believe nothing has changed and the financial fundamentals are still a train wreck. They cite the nebulous national unemployment rate of 9.7 % and the even more controversial underemployment rate of 17.3% as being minimalist indicators of the economic malaise and stagnation that plague the USA. Their logic revolves around the stark realization that it is impossible for true growth to occur because those who still work will have to support the increasing numbers of the jobless. In fact, this is a genuine concern as the legions of unemployed still have to live. Regrettably, they must now draw their livelihoods at the public trough, and the end result is either increased taxation or an enlarged national debt. Additionally, many feel the current upturn in the stock market is just another asset bubble preparing to explode in the face of unwary speculators.
As always, it is left to each of us to plan our lives in these precarious times. Should we be optimistic and join the herd in an attempt to instill confidence. Should we be pessimistic and assume that opportunity in the USA is dying? Or, should we be realistic and use our God given common sense to interpret the conflicting signals? Our future and the future of the USA will depend on our individual course of action!