A respected economist recently referred to our current economic state as “shaky stability.” It isn’t often that an oxymoron is more than an amusing description, but this one is particularly apt.
Unemployment is stuck at 9% and has been since spring. Job growth is stuck at an average of 72,000 per month and has been since spring also. The economy is creeping along just fast enough to employ new workers entering the labor market, but not fast enough to budge unemployment. We’re not in a recession, but we haven’t recovered from the last one either.
That’s the stability part, and it isn’t a good stability.
The economist didn’t talk much about the shaky part, but it’s pretty clear. The U.S. political process is shaky, with the two parties unable to agree on measures that would lead to economic recovery and growth. Europe is shaky, with the countries of the Euro Zone unable to agree on measures that would save their banks from the cascading failures resulting from a Greek default. Even China, the engine of global growth, is shaking a little as its furious rate of modernization inevitably slows.
The Greek default situation right now is the event most likely to shake the stability. A solution to the Greek debt crisis, or measures that would spur U.S. job growth, could inspire business and consumer confidence that would lead to long-term, self-sustaining economic growth.
The future is uncertain. Stay tuned.
James Copenhaver, Director of Investment Management
Economist Jared Bernstein: http://jaredbernsteinblog.com/jobs-report-second-impression-shaky-stability/