Recession over: Jobs needed
The news that the U.S. economy grew by 3.5 percent the third quarter of this year is certainly welcome, after more than a year of economic contraction.
But the fact that the economic growth was fueled to a large extent by two government programs, and failed to produce any significant number of new jobs, makes the good news far more troubling.
For the recovery to continue — for it to demonstrate it is for real — the private sector will have to become the primary economic driver now. And businesses will have to create jobs — lots of them in the coming year and beyond — to begin to lower the unemployment rate and keep consumer spending chugging along.
Many economists believe the third-quarter growth would have been minimal or nonexistent if it weren’t for two federal programs — the cash for clunkers auto-buying incentive and the $8,000 credit for first-time homebuyers.
It’s certainly good those programs had a beneficial, if temporary, effect. And, while there is considerable dispute the actual number of jobs created or saved through the stimulus bill enacted in February, there is no question it had some impact on the economy.
But federal spending can’t drive the economy forever. And a recovery without needed jobs is no recovery at all. Very cautious optimism is in order.