The panic is over.
The worst of the financial crisis is behind us.
But now that that’s the case, economic decision makers need to focus on getting people back to work, Lawrence Summers, a top aide to President Barack Obama, told a group of economists meeting in St. Louis on Monday.
In a speech at the Hyatt Regency St. Louis Riverfront, Summers, Obama’s chief economic adviser, stressed the need to fight stubbornly rising joblessness if the nation hopes to have an economy that’s growing healthily again. With the unemployment rate at its highest level in 26 years and expected to grow further, more and more people are suffering, he said, and also unable to spend and help fuel a recovery.
“We have no higher economic priority for the period ahead than maximizing the rate of economic growth, and with that, the rate of job creation in our economy,” Summers said.
The speech — at the annual meeting on the National Association for Business Economics, which ends today — highlights a growing concern: the specter of a jobless recovery.
Financial markets and corporate balance sheets have begun to bounce back from last fall’s collapse. A survey of NABE economists released Monday predicts economic output to grow 2.9 percent in the second half of this year. But millions of workers are still out of a job, and there’s little new hiring in sight.
So while concerns of a new Great Depression seem to have eased, we still have, as Summers put it, “an unsatisfactory state of affairs.”
Republicans have battered the White House over the issue in recent weeks, and Monday, House Minority Leader John Boehner noted that Summers predicted the $787 billion federal stimulus passed in February would create jobs quickly. Instead, unemployment has grown.
In a statement, Boehner, R-Ohio, said measures to address joblessness now are “an acknowledgement” that previous efforts aren’t working.
“We can’t afford another trillion-dollar mistake,” he said.
In his speech, Summers said that some of the joblessness will ease as the economy recovers. But some may not.
Job creation was weak during the relatively good times earlier this decade. And there is, he said, some evidence that unemployment has risen faster than normal in this recession. Those, Summers said, are signs of deep structural problems underlying the poor job market that will not be easy to fix.
Improving education is key. American students lag other countries on rankings of how many attend college and how they perform. Down the road, that will hurt American companies in a global economy.
“In a world in which American workers are facing more competition from abroad than ever before, we have a central national economic and security challenge of improving our educational system,” Summers said.
But that’s a long-term challenge.
In the short term, Summers said, it’s important to mind what he called “a cleavage” between the viewpoints of many executives, particularly in the financial sector, and the viewpoints of everyday Americans.
“I think it is deeper and sharper than it has been historically,” he said. “Much of that goes to the disaster of the last two years.”
And so, he said — with a nod to President John F. Kennedy — as companies and industry groups lobby for government help, they should be mindful not just of what the country can do for them, but what they can do for the country.
“We really are at a critical moment,” Summers said. “And many of the problems that are most salient in the minds of executives are not those that are most salient in the minds of many citizens. It would be well for many of (the executives) to remember that.”
(c) 2009, St. Louis Post-Dispatch. Source: McClatchy-Tribune Information Services.