The economy must add 13.3 million jobs over the next three years—368,000 each month—to bring unemployment down to 6 percent. Considering continuing layoffs at state and local governments and federal spending cuts, private sector jobs must increase about 400,000 a month to accomplish that goal.
Growth in the range of 4 to 5 percent is needed to get unemployment down to 6 percent over the next several years. In 2011, the economy has been growing at about 2 percent, and that pace is expected to continue through next year.
Jobs were added in recent months and unemployment remained steady only because businesses have been foregoing opportunities to increase productivity. Inadequate investment in labor saving technology, though keeping the headline unemployment number from rising too much, is an ominous sign of recession. Ultimately, employers will slash payrolls to maintain profits, and new layoffs appear in the offing. New unemployment claims continue to hover around 400K per week.
Growth is weak and jobs are in jeopardy, because temporary tax cuts, stimulus spending, large federal deficits, expensive and ineffective business regulations, and increased health care mandates and costs do not address structural problems holding back dynamic growth and jobs creation—the huge trade deficit and dysfunctional energy policies.
Oil and trade with China account for nearly the entire $550 billion trade deficit. This deficit is a tax on domestic demand that erases the benefits of tax cuts and stimulus spending.
Simply, dollars sent abroad to purchase oil and consumer goods from China, that do not return to purchase U.S. exports, are lost purchasing power. Consequently, the U.S. economy is expanding at less than 1 percent a year instead of the 5 percent pace that is possible after emerging from a deep recession and with such high unemployment.
Without prompt efforts to produce more domestic oil, redress the trade imbalance with China, relax burdensome business regulations, and curb health care mandates and costs, the U.S. economy cannot grow and create enough jobs.