NEW YORK ( TheStreet) -- Friday, forecasters expect the Labor Department will report the economy added 193,000 jobs in March. This is in line with the pace of recent months but hardly enough to lower unemployment down to acceptable levels.
In the fourth quarter, GDP was up only 0.6%, slowed by a drop in inventory build and smaller Pentagon purchases. Those factors are not likely to repeat, and first quarter growth should register in the range of 2.5%.
Consumer spending is picking up as rising home and stock prices restore household wealth. However, the pace of the recovery and jobs growth remains disappointing by historical standards and the need to create millions of new jobs to lower unemployment.
Since turning the corner in mid 2009, GDP growth has averaged 2.1% and unemployment has fallen from 10% to 7.7%. In contrast, high oil prices and double digit interest rates pushed unemployment to 10.8% during Ronald Reagan's first term; then GDP growth averaged 5.2% for the next three and half years, and unemployment fell to 7.3%. The economy must add more than 360,000 jobs each month for three years to lower unemployment to 6%. That would require growth in the range of 4% to 5% and is not likely with current policies.
Factors contributing to the slow pace of recovery include the huge trade deficits on oil and manufactured products from China and elsewhere in Asia -- these drain demand for U.S. goods and services. Absent U.S. policies to confront Asian governments about their purposefully undervalued currencies, and to develop more oil offshore and in Alaska, the trade deficit will continue to tax growth.
The recent surge in natural gas production, and accompanying lower prices, is substantially improving the international competitiveness of industries like petrochemicals, fertilizers, plastics, and primary metals -- as well as consuming industries like industrial machinery and building materials.