This is not what the third year of a recovery is supposed to look like. Data released today show that the US gained just 117,000 jobs in July. When viewed relative to June’s paltry 46,000 job gain, July’s figure may seem like good news. But in light of the fact that July marked the two-year anniversary of the recovery and the nation is still short of around 11 million jobs, a 117,000 job gain is well below what’s needed to turn the job market around. Consider this: To close the nation’s massive jobs deficit within three years, the US would need to add around 400,000 jobs in every single one of the next 36 months. By way of comparison, the nation gained an average of 144,000 jobs per month since the beginning of the year and just 72,000 jobs per month between May and July.
Today’s data release comes after a series of economic reports that suggest the recovery is losing steam. As we blogged last week, national economic growth nearly ground to a halt in the first half of the year as the boost to the economy provided by federal recovery efforts faded, state and local governments continued to cut spending, and families further tightened their belts. In fact, inflation-adjusted consumer spending – a key driver of the economy – declined in the spring for the first time in two years. Spending keeps the economy going, but no one – not consumers, not businesses, not government – is spending enough. As Paul Krugman explained in an op-ed yesterday:
“Consumers, still burdened by the debt that they ran up during the housing bubble, aren’t ready to spend. Businesses see no reason to expand given the lack of consumer demand. And thanks to that deficit obsession, government, which could and should be supporting the economy in its time of need, has been pulling back.”
Indeed, with deep federal spending cuts on the horizon, the federal government – the spender of last resort – has essentially been “sideline[d] … as an economic player.”
“It’s now impossible to deny the obvious, which is that we are not now and have never been on the road to recovery,” according to Krugman. Worse still, the prospect of a double-dip recession appears more likely now than ever. If the economic slowdown continues throughout the second half of this year, the unemployment rate will most certainly rise, sending the country back toward recession.