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The positive employment report released by the U.S. Department of Labor on Friday suggested an economy that is gaining strength and allayed fears, for now at least, of a summer slow down. Wall Street has been sending positive signals for months. On Friday the Dow Jones Industrial Average edged above 15,000 for the first time, and the S&P 500 also hit a record, rising above 1,600 points.
The Employment Situation report showed that the economy added 165,000 nonfarm jobs in April, while the unemployment rate dipped to a four-year low of 7.5 percent. Revised figures for February and March also showed additional gains of 114,000 jobs. The economy has added about 6.8 million new jobs in the three years since emerging from the Great Recession.
Most encouraging, perhaps, was the sharp decline in the number of long-term unemployed - those jobless 27 weeks or more - which declined by 258,000. Those unemployed the longest have the hardest time finding work, so these numbers are an indication of significant progress in the recovery.
But while encouraging, job growth is still short of where it needs to be in a robust recovery and the unemployment level is still too high. The American people and business are responding. Workers by getting the education and retraining they need for new jobs and by accepting the fact starting over sometimes means accepting less. Businesses, obviously, are hiring and a growth trend in high-skilled manufacturing jobs continues.
The major impediment to the United States seeing a more vibrant recovery is its government. Democrats and Republicans, the White House and Congress, remain unable to reach the compromises necessary to balance current spending needs with a long-term plan to drive down deficits which, if unchecked, will stall any recovery.
In the place of policy we have the sequester with its arbitrary and often misguided spending cuts that hit necessary and wasteful programs equally. Nothing would invigorate the markets more than a demonstration by Washington that it can get serious about fiscal policy.
The path to a compromise remains obvious; an overhaul of the tax system that reforms and simplifies the process, incentivizes domestic investment and discourages moving assets offshore, and in the process generates additional revenues. As for spending trends, President Obama has been willing to cross a political line on the left by saying he is open to reducing Medicare and Social Security expenditures. But Republicans remain unwilling to put increased tax revenue on the table.
If this modest jobs report is to set the stage for exceptional ones to come, the GOP must compromise or suffer political consequences for failing to do so.