A look at the recent December employment numbers show an improving job market. While the unemployment rate remains high at 8.5%, we are seeing signs that we are starting to see the fruits of a recovery. A look at both the State of Georgia and Albany also show somewhat encouraging signs as the unemployment rate fell in our area too. Will this trend continue or just be a brief respite from a discouraging job market?
The employment figures show positive signs that go beyond seasonal hiring. While there are many that are suggesting that job numbers are only improving because of the holiday season, it should be pointed out that the U.S. unemployment rate is seasonally adjusted. Therefore, it is comforting to see 200,000 jobs being created over the last month. In fact, over 2.7 million jobs have been created since March 2010. Even though this boost in job creation may not be enough to achieve a net gain over the four-year period, we must realize the depth of despair that occurred over the last four years.
The labor tailspin actually started during the latter stages of the Bush administration where 4.4 million jobs were lost before Obama stepped in office. The collapse of the financial sector brought down a house of cards that spanned across multiple industries with automotive, construction, and manufacturing suffering significant losses.
Events continued to deteriorate when President Obama assumed office in January 2009. We witnessed a further decline of 4.3 million jobs disappeared under Obama before we started our turnaround in the spring of 2010. Distressed bankers and households who drowned in a mountain of debt brought our mighty economy to its knees.
Drastic governmental intervention in the form of the Troubled Asset Relief Program (TARP) and the American Recovery and Reinvestment Act were implemented to stop the bleeding. TARP was controversial because public tax dollars went to large financial institutions and private corporations. There was speculation that these investments would result in severe losses. However, we can now say that TARP brought stability to the financial sector and a mini-depression was prevented. With the American Recovery and Reinvestment Act, the non-partisan Congressional Budget Office estimated that between 1.2 to 3.3 million jobs can be attributed to this piece of legislation. Without its passage, our unemployment rate could have peaked to beyond 11% and decreased economic growth by up to 3%.
When looking at the recent performance, we can attribute its rise to increases in economic indicators and moderation of energy prices. One factor that dampened economic prospects in the spring and summer of 2011 were rapid increases in food and gas prices due to abnormal weather patterns that affected crops and disrupted production chains through various industries. However with those effects moderating during the end of the year, we have seen boosts to manufacturing output and signs that the auto sales are starting to pick up. With gas prices falling, that is loosening our pocketbooks to spend more on cars and other economic activity.
Will this trend continue as we proceed further into the new year? Who knows. However, I’d rather look at it from the half-glass full perspective. Americans have done a good job adjusting their buying habits, drawing down their debt, and are hopefully poised to regain prosperity in the near future. Let’s hope the winds of jobs and higher incomes will soon be on their way.