US Outlook: It is as if the US labour market hired a PR team.
The zero figure for jobs growth in August – the first time the rate has been dead flat since the 1940s – seemed almost calculated to get under the public's skin. How Barack Obama must have wished that the figure was plus or minus 2,000, or some such. There are already intolerably high expectations for Mr Obama's speech next Thursday, in which he plans to lay out his ideas for bringing down the unemployment rate. Now, he will address the joint session of Congress as the "Zero Jobs President", and the poverty of the available options to create new employment will be laid bare.
That poverty stems from two separate issues. One is the shakiness of business confidence, which has ebbed as executives have settled into the view that the US is in for a very long period of sub-par economic growth, plus the occasional brush with a new recession. The other is the political situation: the ideological schism between the parties and the looming election, both of which reward lawmakers for doing nothing and blaming the other side for the resulting economic mess.
What are the options? There are four categories, three of which take money, all with flaws. The free option is a package of measures to encourage business confidence, which might involve repealing some hated red tape law (maybe even parts of the healthcare law), but this misreads the situation for companies. Executives' worries are with end demand for their goods and services, not with their profitability, which in many cases is at record levels.
A really bold jobs plan takes real money. The federal government must either pay businesses to hire, pay state and local government to hire, or do the hiring itself. Tax breaks, perhaps on the repatriation of overseas money, for companies that agree to hire is one oft-floated measure in the first of these three categories, but it too fails to reflect the reality of why businesses are not hiring.
Local government has accounted for more than half a million of the jobs lost since September 2008, and was a weak spot in the August numbers. Transfers down to the states and localities could at least stop the job losses, but such transfers appear to be off the table. An infrastructure bank, funding local building projects, could be up and running next year, not soon enough but better than nothing.
Which leaves direct hiring by the federal government, perhaps by a big schools rebuilding scheme or upfront money for energy-saving home improvements – exactly the sort of stimulus measures that worked two years ago and are now being drained from the system, zeroing out other employment growth.
You can't go a day over here without hearing someone quote Winston Churchill: America will always do the right thing, but only after exhausting all other options, he said. I'm not so sure.