US: Job Market is Still Weak
The recession that rocked world economies, leaves USA with a bad taste in the mouth. The country is still to fully recover from the catastrophe of joblessness, GDP growth failure and the feeling of insecurity among masses. This is the second month of suffering for the American community and work force, spelling joblessness for many.
Examining the haul: It’s been four years since recession struck one of the largest economies in the world and two years have passed since the American economy officially recovered from the disaster. However, even now, the GDP rates and jobs are still stuck at dismal numbers. In words of President Obama, “we have a long way to go”.
The Statistics reveal that the recovery following the last major recession in the early 1980s, which also lasted two years, was relatively healthier than the recent one. A step by step comparison shows that the jobless rate in 1982 when the recession ended was 11% and dropped down to 7.2% within the next two years. Numbers show that the recession of 2007 did not hurt the economy on as large a scale, leaving it with a joblessness of 9.6% in 2009 but it definitely hit harder this time around, because the rate has gone down by only 0.4% over the last two years.
GDP, another indicator of economic growth presents the same dismal picture this time around. In the seven quarters following the recession of the 1980s, the GDP grew at an impressive rate of 7.1% compared to a measly 2.8% this time around. In the first quarter of this year, the GDP was even lower at 1.8%. Experts opine that such low GDP rates cannot generate enough employment opportunities to support the economic growth in a positively strong way.
Where did America go wrong?
The answer is nowhere.
Gary Burtless, a senior economist at the Brookings Institution analyzed the glaring differences in growths following the two recessions. He pointed out that productivity of workers in present day is a given high. This is to say that fewer workers can achieve the same goals that several did years ago. This further aggravates the job market even in a slow growing economy.
Burtless told The Lookout that in the early '80s, the Federal Reserve could rekindle growth by bringing the interest rates down .The businesses and consumers could now borrow money easily, triggering a bounce back in construction and other sectors. This time though, the recession hit the economy when it was at one of its low points anyway. The interest rates were low when the economy started to crumble and are now down to zero, in which case, there is little Feds can do to coax it back into motion.
With time, though it is expected that America will rise to her former success and economic wonders in all its glory!