The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage. NEW YORK ( TheStreet) -- Forecasters expect the Labor Department will report on Friday that the economy gained only 110,000 jobs in June, after adding a lackluster 54,000 in May. Though an improvement, the level of job creation is hardly stellar, because GDP growth slowed in the first half of 2011 to about 2 percent. Unemployment is expected to remain steady at 9.1 percent. It would be higher except that many adults have quit looking for work, discouraged by poorly paying and unsatisfying opportunities in an economy that creates too few professional positions for the growing supply of college graduates. Middle-aged workers with savings and lesser earning spouses in two income families have quit the labor force altogether rather than put a BA in English, MS in Social Work or an MBA in finance behind the counter at Barnes and Noble, Staples or Starbucks. To bring unemployment down to 6 percent over three years, the economy must add 365,000 jobs a month and grow at 4 to 5 percent a year. Together, dependence on foreign oil, the lack of exports to pay for imports of consumer goods, and rocketing health care costs are frustrating the recovery.
Without stronger growth in the third and fourth quarters, the economy will cycle down into recession. The economy can't likely continue to drag along growing at about 2 percent indefinitely.
Americans will continue to use millions of barrels of gasoline each day. Developing domestic oil reserves and more aggressively building out fuel efficient vehicles would fire up growth and create high-paying jobs. However, the Obama administration's energy policies have blocked domestic drilling and inadequately encouraged more natural gas use. Government- rescued General Motors ( GM) fights fuel efficiency tooth and nail. The Volt is a novelty on its balance sheet, as GM lags Ford ( F) and Toyota ( TM) in hybrid technology, and its gas-guzzling Escalades still anchor its business model. Failure to actively encourage more domestic oil and gas production and push GM to get with the program on energy conservation, by sending dollars abroad for oil imports, is a lethal jobs killer. China maintains an undervalued currency by purchasing about $450 billion in foreign currencies each year; this reduces domestic Chinese consumption and subsidizes Chinese exports by about 35 percent. Failure to act to offset Chinese currency subsidies, for example by taxing dollar yuan conversions, is the single most significant failure in the Obama Administration policy to create an adequate number of jobs. Finally, the 2010 health care law is pushing up health care costs, rather than reducing those as promised, making insurance unaffordable for many small and medium sized businesses. Although manufacturing has enjoyed a stronger recovery than the rest of the economy, it has been significantly focused on activities that use very little labor illustrating the burden that health care imposes on U.S. employers. Recent credit agency warnings that U.S. debt may lose its AAA rating are more than statements about the political gridlock in debt ceiling negotiations. U.S. deficit problems will ultimately require more robust growth in employment and tax revenues and require Congress and the President to revamp energy, trade, and health care policy. Without those, the American economy cannot succeed.