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Shaky Jobs Picture For Rest Of The Year, WH Report Says

The Economic Report of the President was released today by the Council of Economic Advisers, led by Christina Romer. It is described as “a brief overview by the President of the Administration’s economic policies and goals for future initiatives.” This is basically a clean summary of the past, present and future of the US economy as the President and his economic team sees it.

The report describes the perilous economy that the Obama Administration inherited, and the steps they have taken to counteract it. Christina Romer details this in a blog post. But the number that’s popping out at everyone from the 400-page report is this.

WASHINGTON — President Barack Obama’s top economic advisers offered a cautious forecast on Thursday that U.S. job gains for 2010 will average 95,000 a month, with analysts expecting hiring to expand by spring.

In a conference call with reporters on Wednesday, Christina Romer, the head of the White House Council of Economic Advisers, said that the administration’s projection is below the consensus of private Blue Chip forecasters, who envision a more optimistic monthly average of 116,000 jobs.

“We’re very much in the range of other forecasters. Going forward, we expect that to pick up, we think it’s very important that it pick up strongly, because it is what ultimately will put Americans back to work,” Romer said.

The administration’s downbeat 95,000 monthly jobs projection follows a similar cautious forecast offered with the president’s proposed fiscal 2011 federal budget on Feb. 1. Romer and budget director Peter Orszag then projected that unemployment would remain high, at 9.8 percent late this year and 9.2 percent at the end of 2011.

There’s a rule of thumb that the economy needs to produce around 100,000 jobs a month just to keep up with new entrants into the work force. A 95,000 monthly projection essentially means a flat unemployment rate.

This is despite the report’s claim that, by the 4th quarter of 2009, the Recovery Act had created or saved 1.8 million jobs. Without it, unemployment would be well past 11%. But despite that impact, the statistics being offered today suggest that the Recovery Act did not stimulate the economy enough to solve a persistent jobs crisis.

First-time jobless claims fell this week to around 440,000, but that’s still not in the range where you would expect job growth, which Romer said would return in the spring.

Senate Democrats are meeting about their jobs bill today, but all reports indicate that it will be well short of what is needed to reverse this trend. And the report from the CEA shows less resolve and more resignation with this reality.

Beyond the statistical figures, the jobs crisis will negatively impact an entire generation of workers, whose living standards and job security will decline. The implications are varied and grave.

There is unemployment, a brief and relatively routine transitional state that results from the rise and fall of companies in any economy, and there is unemployment—chronic, all-consuming. The former is a necessary lubricant in any engine of economic growth. The latter is a pestilence that slowly eats away at people, families, and, if it spreads widely enough, the fabric of society. Indeed, history suggests that it is perhaps society’s most noxious ill.

The worst effects of pervasive joblessness—on family, politics, society—take time to incubate, and they show themselves only slowly. But ultimately, they leave deep marks that endure long after boom times have returned. Some of these marks are just now becoming visible, and even if the economy magically and fully recovers tomorrow, new ones will continue to appear. The longer our economic slump lasts, the deeper they’ll be.

If it persists much longer, this era of high joblessness will likely change the life course and character of a generation of young adults—and quite possibly those of the children behind them as well. It will leave an indelible imprint on many blue-collar white men—and on white culture. It could change the nature of modern marriage, and also cripple marriage as an institution in many communities. It may already be plunging many inner cities into a kind of despair and dysfunction not seen for decades. Ultimately, it is likely to warp our politics, our culture, and the character of our society for years.

You’d think someone would do something about it.

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David Dayen

David Dayen