Markets

Jobs: The Thorny Truth

Updated on: February 16, 2010 / 10:53 AM EST / MoneyWatch

I received an angry e-mail from a CBS Evening News viewer after my appearance with Anthony Mason last night. The writer said that I was an apologist for the Obama Administration, which seems far-fetched since I've been writing critical pieces about the way the White House has handled the economy for about a year. But when the topic is jobs, Americans are anxious, uptight and downright mad. Last night, I tried explain what impact the new $15 billion jobs bill might have on employment.

One thing I should have mentioned in this piece is that there should be some relief from the remaining stimulus money that will be spent and census hiring in 2010. Even so, the Council of Economic Advisers' annual Economic Report of the President doesn't foresee a big upturn in the jobs market for a few years. Here are the predictions:

2010: 95K jobs created per month; unemployment rate=10%; GDP=3%
2011: 190K jobs created per month; unemployment rate=9.2%; GDP=4.3%
2012: 251K jobs created per month; unemployment rate=8.2%; GDP=4.3%

Remember, according to the most recent labor report, 8.4 million jobs have been eliminated in the Great Recession and the CEA numbers indicate that it's going to take a long time before we return to the pre-recession levels of employment.

So when Senate Majority Leader Harry Reid suddenly slashed the jobs bill from $85 billion to $15 billion last week, the near-universal reaction from the economists that I spoke with was that $15B is a drop in the bucket and won't make a significant dent in the labor market.

The $15B bill includes:

$13B payroll tax break for employers who hire new workers
$35M for small business depreciation
$2B billion for "Build America Bonds" for infrastructure;
1-year extension of the highway bill, which is unlikely to have any revenue effect

Where does that leave us? With a thorny truth: it's hard to generate jobs when employers are worried that they can't sell stuff and it's hard to see how consumers will start spending again until the job market improves. I know--this is a dissatisfying answer to the question of job creation. But as I said at the end of the Evening News segment, never underestimate the ability of the US economy to surprise--just as many didn't predict how bad it could get, there's also a chance that we are selling short the possibility of a better-than-expected recovery.

Jill Schlesinger

Jill Schlesinger, CFP® is the Emmy-nominated business analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and chief investment officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.

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