In the recent job report there is some encouraging news. The unemployment rate is at all-time low in last 5 years. The economy created more than 165000 jobs and 26 states showed positive job increase compared to only 7 which showed negative trend. This is the biggest economic recession since the great depression and even after 5 years the economy is still in the path to recovery and there is little hope of the condition of the economy being anywhere near to the pre-recession level before 2015.
There are several reasons why the economy is not bouncing back quickly. The whole growth path in last few years is solely carried by the service sector. Other sectors are still in negative or unchanged. The basic nature of the industry is shifting from manufacturing to service based in US which needs a total shift in the workforce capability. Mixed monetary and financial policy is not helping. Government pumping money in the system is helping keep the liquidity in the market but Federal austerity measures are drying up government jobs. High corporate tax for manufacturing companies is pushing more manufacturing jobs out of the country and no real growth in that sector. Foreign direct investment in the non-service sector is not coming at all due to the lack of government incentives in manufacturing, mining or construction sector. All these are causing the recovery to remain slow and sluggish. European crisis is also not helping US to recover quickly as the global job market gloom is still looming large on the other side of the Atlantic.
There are several ways to boost the growth rate. For instance, cutting the corporate tax codes will increase more flow of funds into the corporate houses and into the economy and therefore more jobs are likely to be created. Reducing the home interest rate and lowering the mortgage rates will further create demand for homes and more money will come to the economy. Overhaul of immigration policy in manufacturing job sector and highly skilled sectors will retain many jobs within US and prevent outsourcing thereby creating more jobs in the economy.
Reference
- Felix Simeon, Understanding the painfully slow jobs recovery, May 3 , 2013 , Reuters , Retrieved on 10th May 2013 from http://blogs.reuters.com/felix-salmon/2013/05/03/understanding-the-painfully-slow-jobs-recovery/
