U.S. President Barack Obama and Democrats want more jobs. So do Republicans. Heck, everyone does. Yet, job creation is weak. It's true that the economy has generated 5.5 million jobs from its low point. Still, there are 3.2 million fewer jobs now than at the previous high. The official unemployment rate is 7.9 percent, but it would be 14.4 percent if it included part-timers who would like full-time work and discouraged workers who have stopped looking, notes Janet Yellen, vice chair of the Federal Reserve Board. Scarce jobs are the nation's first, second and third most important economic and social problem.
What's especially disheartening and mystifying is that, until now, job creation was considered an inherent strength of the American economy. Despite some years of recession-induced joblessness, unemployment averaged 5.6 percent from 1950 to 2007. The Congressional Budget Office doesn't expect it to fall below 7.5 percent until 2015. That would make six years above 7.5 percent — the longest stretch of high joblessness in 70 years.
Something's changed in how the economy works. One theory is "deleveraging": Americans paying down their high debt. The economy won't accelerate until this process is complete, the argument goes; the fact that debt-service ratios have dropped to early-1990s levels is considered a good omen.