Gander
Banned
- Joined
- Apr 5, 2010
- Messages
- 240
- Reaction score
- 58
- Gender
- Male
- Political Leaning
- Independent
This job growth is an encouraging development. Such job growth will need to accelerate and be maintained if the nation's high unemployment rate is to begin a sustained descent toward a level closer to full employment. The handoff from the public sector's support of aggregate demand through substantial fiscal stimulus to the private sector in coming months will have risks, so the job growth numbers could prove volatile. Ultimately, the private sector will need to regain confidence that rising demand will be sustained. Only then will hiring pick up and continue at a rate necessary to materially reduce the nation's unemployment rate. Gimmicks e.g., tax cuts aimed at creating jobs, will do little. A sustained expansion of aggregate demand will do most to build and maintain private sector confidence.
To what extent do you think the fiscal stimulus impacted aggregate demand, and what evidence do you have to support your conclusion?
In my estimation, this recent increase in job growth has more to do with producer and consumer psychology than anything else, i.e., increased confidence in market conditions brought about by steady growth in GDP and consumption; the liquidation of bad assets and the return to market equilibrium has created an environment more conducive to consumption and hence hiring.
Simply stated, people have convinced themselves that the worst is over and are now comfortable with returning to normal spending and hiring habits.
As to the remainder of your post, I would say the most important thing we can do to secure steady and stable growth in the future is to shift the economic paradigm from one of endless consumption (public and private) to one of savings and prudence; this could be best effectuated through moderate monetary policy and an incremental phasing out of dependence-perpetuating fiscal programs.
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