The Bureau of Labor Statics jobs report, June 2013: unemployment rate unchanged.
To be precise, the unemployment rate is hovering at 7.6%, exactly where it has been since March, except for a brief interlude in May when it dipped down to 7.5%. While those numbers represent a significant drop from the 10% unemployment the United States experienced in October 2009, it’s still a mere 0.2% lower than the 7.8% jobless rate that President Obama inherited when he first took office in January 2009. Quite the recovery.
While America’s shambling rehabilitation from the financial collapse is real, it has been stymied by government budget cuts and mass public employee layoffs. Between 2009 and summer 2012, public schools alone shed 300,000 employees. The job cuts have continued since, thanks in part to the sequester. Congress, meanwhile, has stalwartly resisted any attempts new stimulative spending, even refusing to fund an upgrade to country’s corroding infrastructure.
The rationale for cutting spending on social services, basic infrastructure and public employment was based in large part on the claim that high debt levels were dragging down the economy. An influential study by economists Carmen Reinhart and Kenneth Rogoff found that nations’ economies begin to shrink once their overall debt burden exceeds 90% of their GDP. Cutting America’s debt, said the austerians, will spur private investment and grow the economy.
Washington policymakers went along with the plan. The federal government actually reached its self-imposed deficit reduction target in March, to very little fanfare. One month later, researchers at the University of Massachusetts-Amherst found “serious errors” in the Reinhart-Rogoff study. The U.S. had given austerity a fair shot, even though the empirical case in its favor was looking more dubious than ever.
Yet, as this month’s jobs numbers demonstrate, nothing has changed. Austerity drags on at the state and municipal levels, and Congress is unlikely to do anything about it any time soon. House Speaker John Boehner reiterated the Republicans’ opposition to stimulative spending in a statement responding to the latest numbers.
“Imagine how many jobs would be created if the president stopped trying to expand government and started working with Republicans on policies that create sustained economic growth and expand opportunity for all Americans,” he said.
The White House’s own response urged lawmakers not to “impose self-inflicted wounds on the economy,” but tacitly acknowledged the president’s limited power to influence domestic economic policy.
“The president will continue to press Congress to act on the proposals he called for in his State of the Union address to make America a magnet for good jobs, help workers obtain the skills they need for those jobs, and make sure that honest work leads to a decent living,” said White House Council of Economic Advisers chairman Alan B. Krueger.
So the political dynamics remain basically unchanged. The political machinery for tinkering with economic policy remains stuck in place. The unemployment rate is unchanged.