With southern Europe's depression dampening continental demand for goods made in Germany and other northern European nations, the prospects for U.S. exports and cut-priced competition from Europe in U.S. markets is heating up -- growth and jobs creation could stay depressed for a long time. Similarly, the Japanese prime minister's much-heralded stimulus and reforms appear to come down to debasing the nation's currency to jack up exports to North America and very little else. Labor market reforms have been shelved, and there's no sign Japan will ease immigration policy or provide new incentives for family formation to counter its declining population. That spells yet more cut-rate competition for U.S. manufacturers. It is hard to imagine the Federal Reserve could do more to support growth. Already, it is buying virtually all the new mortgage-backed securities and 70% of the new federal debt issued each month.
And low rates penalize the elderly who rely on CDs and fixed-income investments, reducing their spending on goods and services. Many cash strapped elderly have returned to work, often taking jobs from younger workers. Stronger growth would help and is possible. Forty-five months into the Reagan recovery, GDP was advancing at a 5% annual pace. Nowadays, that pace would bring unemployment down to 5% pretty quickly. More rapid growth requires importing less and exporting more -- dealing with the $450 billion trade deficit on oil, by drilling more offshore and in Alaska, and with China, by addressing its undervalued currency and protectionism.
Faster growth also requires right-sizing business regulations to make investing in new jobs less expensive and time-consuming. Regulatory enforcement is needed to protect the environment, consumers and financial stability but must be delivered cost effectively and quickly to add genuine value. Overall, more jobs require trimming back on tax increases and spending cuts, and more pro-growth trade, energy and regulatory policies. Follow @PMorici1 This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.