Job growth remains stagnant
Anna Boarini | Monday, December 5, 2011
The recession has effected all portions of the economy, but the job sector has been hit the hardest, said Saint Mary’s Economics professor Jerry McElroy. McElroy was featured in a story on joblessness on MSNBC’s “The Bottom Line” last Thursday.
“Where we are today is just a little bit above where we were in terms of overall economic activity in 2007,” he told The Observer Monday. “So in other words we haven’t come very far.”
McElroy said one of the reasons the recession has been difficult to recover from is the lack of job growth. Essentially, the current economy is a jobless one.
“The economy lost 8.7 million jobs. That was during the downswing,” he said. “During the upshot, we only gained about 2.5 million, and so that is why it has been called a jobless recovery.”
McElroy said this is the first time the U.S. has seen a jobless recovery since the Great Depression. Because the economy has seen a recession, consumers are not spending as much money, which is not good for American business, he said.
“The consumer is just not buying like they used to,” he said. “The engine of the U.S. economy is the consumer. The household consumer accounts for 70 percent of total expenditures of the economy.”
McElroy said there are four reasons the household consumer is not spending money: the financial meltdown, the crash of the housing bubble, debt costs and lower wages than past averages.
“The real wage of the average American has been falling, and if your wages are really falling, you are not going to be spending a lot,” he said.
Even though the economy has still not completely recovered from the recession, retailers saw successful Black Friday and Cyber Monday sales, McElroy said.
“Most retailers say that they do 40 percent of their business between Thanksgiving and New Year’s,” he said. “So if they don’t make it now, they are going to go under.”
McElroy said there are signs that the consumer is waking up and spending more money.
“No. 1: For the last three months, the economy has added over 100,000 jobs, so that’s good news,” he said. “No. 2: The unemployment rate just fell in November from 9 percent to 8.6 percent, so that means we are making progress.”
McElroy said the final reason the economy saw a boost was that retail sales for Black Friday and Cyber Monday were above what economists had forecasted.
“Now this makes the retailers feel good, and another good indicator is that consumer sentiment, when consumers feel better, seems to be rising,” he said.
Even though the economy has seen some growth and the biggest shopping weekend of the year was a success, McElroy said people are still dealing with the fallout from the recession.
McElroy said that food pantries around the country are serving demographics they have not encountered before.
“All these managers of food stamps across the country are seeing people they have never seen before,” he said. “They identified a couple of groups: unattached young people and families with both parents and children.”
The recession has effected donations to food pantries, which has added pressure on the organizations.
“They have seen a decline in donations. Some donors are giving less and some donors are becoming receivers,” he said. “Secondly, they have experienced a cut in federal funding, and thirdly the price of food is going up and as a result, the food bank dollar goes less far.”