Despite the better than expected jobs report today — unemployment fell to 9.1 percent in July as 117,000 new jobs were created — fear has taken over the stock and job markets. There is increasing talk of a double-dip recession.
Unfortunately, the tools generally available to deal with those problems are much fewer in number. The 2009 stimulus package stopped us from going over a cliff, but it didn’t restart the job engine. Now, rather than spending money to create jobs, the federal government is cutting spending. And the Federal Reserve already has cut short-term interest rates to near zero and had two rounds of bond-buying with limited results.
Meanwhile, companies are sitting on about $2.5 trillion in cash. But hiring lots of workers doesn’t appear to be on their agenda. At least 250,000 to 300,000 new jobs need to be created each month to put a significant dent in the jobless rate.
What do you think should be done? Tax cuts? Infrastructure spending? Let the free market runs it course?
- Henry Unger, The Biz Beat
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