October Jobs Data Better but Still Not Enough: Opinion

NEW YORK ( TheStreet) -- The economy added 171,000 jobs in October. That was up from 148,000 in September, but hardly enough to bring unemployment down to acceptable levels.

The unemployment rate increased to 7.9% last month from 7.8% in September.

In the weakest recovery since the Great Depression, most of the reduction in unemployment from its 10% peak in October 2009 has been accomplished through a significant drop in the percentage of adults working or looking for work. Were adult labor-force participation the same today, the unemployment rate would be 9.6%.

Adding more than eight million part-time workers who can't find full-time work, the unemployment rate becomes 14.6%. It rose above 14% when President Obama took office and remains stuck there.

Convincing millions of Americans they don't want a job or compelling desperate workers to settle for part-time work has been the Obama Administration's most effective jobs program.

Growth remained a slow 2% in the third quarter as consumers remained cautious, the trade deficit on oil and with China continued to drag on demand and businesses -- concerned about the fiscal cliff, the cost of Obamacare and the grip of regulatory and other anti-business policies -- slashed investment.

Prospects for substantially reducing unemployment remain slim. The economy would have to add about 12.6 million jobs over the next three years -- about 349,000 each month -- to bring unemployment down to 6%. Growth in the range of 4% to 5% is necessary to accomplish that.

Recent moves by China to further close its markets to stimulate its own flagging economy will worsen the trade deficit and weaken U.S. growth without a substantive response from Washington. Similarly, the financial crisis in Europe worries U.S. businesses about a second, even more severe recession and discourage new hiring.

It is simply not true, as President Obama has claimed throughout his campaign, the economy faces changes more daunting than any time since the Great Depression. Ronald Reagan inherited a similarly difficult situation -- unemployment that peaking at 10.8% in November 1982 and double-digit inflation and interest rates.

President Reagan put in place a very different set of stimulus measures -- emphasizing private-sector leadership -- and when he faced the voters in 1984 the jobless rate had fallen to 7.3%. During his recovery, GDP growth was averaging a brisk 6.3% in contrast to President Obama's 2.2%.

Growth is weak and jobs are in jeopardy because temporary tax cuts, stimulus spending, large federal deficits, expensive but ineffective business regulations, and costly health care mandates championed by President Obama do not address the structural problems holding back dynamic growth and jobs creation: the huge trade deficit and dysfunctional energy policies.

Oil and trade with China account for nearly the entire $600 billion trade deficit. Dollars sent abroad that do not return to purchase U.S. exports are lost purchasing power. Consequently, the U.S. economy is expanding at 2% a year instead of the 5% pace that is possible after emerging from a deep recession and with such high unemployment.

Governor Mitt Romney has promised prompt efforts to produce more domestic oil, redress the trade imbalance with China, curb health-care mandates and costs, and relax burdensome regulations would create up to 12 million new jobs, and lower unemployment to more palatable levels.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Professor Peter Morici, of the Robert H. Smith School of Business at the University of Maryland, is a recognized expert on economic policy and international economics. Prior to joining the university, he served as director of the Office of Economics at the U.S. International Trade Commission. He is the author of 18 books and monographs and has published widely in leading public policy and business journals, including the Harvard Business Review and Foreign Policy. Morici has lectured and offered executive programs at more than 100 institutions, including Columbia University, the Harvard Business School and Oxford University. His views are frequently featured on CNN, CBS, BBC, FOX, ABC, CNBC, NPR, NPB and national broadcast networks around the world.

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