February 15, 2012
President Obama may have received a boost in his approval ratings recently, but the continued slow rate of economic growth does not reflect well on his policies.
In his third State of the Union address last month, President Obama touted two years of job growth and the fastest job creation since 2005. Unfortunately, these numbers lack context, considering that we’re dealing with the aftermath of the worth recession in two generations.
In a new analysis, Heritage Foundation labor economist James Sherk points out that business remains hamstrung by overregulation and artificial job creation will only delay real economic growth.
Generally job creation surges after a deep recession; entrepreneurs and investors find new productive work for the unemployed. For example, unemployment rose to 10.8 percent in the 1981–1982 recession. After that recession ended, hiring boomed. In the last three quarters of 1983, net hiring during each quarter averaged 6.8 percent of the available labor supply. Millions of formerly unemployed workers found new jobs and unemployment rapidly returned to pre-recession levels. That has not happened in this current recovery. Instead, America has gone through the weakest recovery in more than half a century.
In fact, he says, the current economic recovery is the slowest recovery in the post-war era.
As of December 2011—four years after the recession’s onset—payroll employment remains 4.0 percent below the number of workers employed when the recession started in December 2007. Private-sector employment is 4.5 percent below pre-recession levels. That represents 5.6 million net fewer jobs; 5.2 million of those net job losses occurred in the private sector.
As a result, unemployment remains at 8.3 percent—lower than it was two years ago but still historically high. It is projected to remain high until entrepreneurs and investors find new productive work for the unemployed.
With the government in the habit of creating a business climate that stifles real economic recovery, it’s time for sustainable economic growth from private innovation.
Are you satisfied with the current rate of economic growth?