Opinion

The Economy and Our National Funk

“Yes, we can.’’ That was Barack Obama’s mantra as he took the helm of the nation nearly two years ago. Even though the economy looked scary, he — and we — had a sense of optimism that we could fix it. Not only would we avoid a second Great Depression, but we’d make things better.
Since then, we’ve successfully pulled back from the precipice. Private employers have added jobs for 10 straight months. In September, the National Bureau of Economic Research declared that the recession ended in June 2009.
And yet, despite these improvements, we seem to have lost our can-do conviction that the economy can indeed improve, that we can again create good jobs for all who need them. There appears to be a growing acceptance that slow job creation is “just the way things are.’’ A growing fatalism convinces us that the economy will be stuck at the bottom for quite some time.
These diminished expectations aren’t merely evidence of a national funk; they also pose a real threat to our economy — not just by making businesses and consumers less willing to invest in the future, but also by letting elected officials off the hook. Bringing down unemployment means more stimulus programs, but the widespread idea that we are doomed to austerity gives policy makers an excuse not to tackle the problem.
Americans are talking as though 2008’s direst economic predictions had come to pass. “Recovery means lower expectations,’’ MSNBC recently pronounced, reflecting the tone. Three out of every four millennial workers — those age 18 to 27 — report feeling threatened by the possibility of a layoff or job loss in the near future, and this is dimming their career hopes, according to a recent study by Lumin Collaborative. Older workers are delaying retirement because of falling assets, and many are accepting jobs far beneath their experience and education.
We are sending a new Congress to Washington, but we lack any faith that our representatives actually can address the most pressing issue on our minds: jobs. According to a recent poll from CBS, barely four in 10 Americans think that congressional Republicans have a clear plan for creating jobs. Obama’s numbers on this issue are only slightly better.
When nearly one in 10 are struggling to find work, and after 2.5 million foreclosures and counting, this sense of despondency is understandable. But this reaction, even among those who are working, is one of the most insidious outcomes of the Great Recession. Even though you or I cannot create the 15 million jobs necessary to get all those unemployed back to work, believing that no one can do so can hurt us all. A lack of ‘can-do’ thinking on the part of those in power — and those who advise them — will be just as disastrous for the American economy as was recession.
Consider what’s happened in Japan. That economy continues to struggle to recover from the bursting of its housing bubble in the 1990s. Japan has been stuck in a deflationary spiral, eerily similar to the path the U.S. is headed down. The fundamental problem has been a lack of willingness to spend and the political will to take the necessary steps to push Japan back on a path of stronger economic growth.
A more encouraging example, from Germany, suggests that we don’t have to accept that high unemployment is “the way things are.’’ German policy makers, for example, take unemployment seriously. And while their nation saw a larger decline in output during the Great Recession than did the U.S., their unemployment rate did not rise. Policy makers had put in place measures to encourage employers to keep on workers by temporarily cutting hours. In this way, they avoided the kind of high unemployment we’re now seeing, and Germany is now set to experience its fastest year of growth since 1991.
The federal stimulus bill saved or created more than 3 million jobs, and states received some relief to help them cope with falling tax revenues. But federal dollars are fading long before we’ve solved the unemployment problem.
Now much of the conversation in Washington is turning to paring back spending, rather than focusing on job creation. Washing our hands of the problem of high unemployment won’t make it go away. We need to demand that our elected leaders continue to focus on job creation — and not accept the notion that they can’t solve the problem. v

Heather Boushey is a senior economist at the Center for American Progress.