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Not Good Enough

Dec 26, 2010 | By: Mr_Blue | Tags: economy, jobs, gdp, job growth

On December 22 Commerce Department released its third and final estimate of GDP growth for third quarter of 2010. The third estimate of GDP growth was 2.6%. Any growth is better than no growth but it’s far from good enough to generate the number of jobs that we need. The Jobs Hole is very deep.

Here’s the News Release from the Commerce Department.

Jobs Hole is still huge. We are 11 MILLION jobs off from pre-Great Recession employment levels. This means that if what want to get back to pre-Great Recession job levels in five years the economy would have to add 300,000 job every month for 60 months in a row. We are not even coming close to this level of job growth - November payrolls increased by a measly 39,000.

Economic growth is still too weak to foster the job growth necessary to climb out of this Jobs Hole. Check out these two graphs from the Center on Budget and Policy Priorities. The first graph is GDP growth and second graph is non-farm payroll. Notice the relationship - weak growth means weak job creation.

We need much stronger GDP growth to generate more jobs. Something in the range of high 3% to 4%. But it’s hard to see where that type of economic growth is going to come from. Private sector is still weak and government sector is experiencing deficit hysteria/austerity fetish. The near future doesn’t look too bright.

Good luck.