Obama looks for new ways to boost struggling job market
Recent indicators have shown an economy growing slower than forecasters expected. President Obama's political fortunes could hinge on whether the economy makes progress between now and the 2012 election.
President Obama says he's is considering new ways to grow US jobs, amid signs that America's economic recovery has weakened.
"On Monday, I’ll travel to North Carolina, where I’ll meet with my Jobs Council and talk about additional steps we can take to spur private sector hiring in the short-term and ensure our workers have the skills and training they need in this economy," Mr. Obama said in his weekly address to the nation Saturday.
The imperative is easy to understand. The nation's unemployment rate edged up to 9.1 percent in May, and Obama's own political fortunes could hinge on whether the economy makes progress between now and the 2012 election.
Recent indicators have shown an economy growing slower than forecasters expected. Many economists expect growth will pick up modestly during the year's second half (growing perhaps at an annualized rate of 3 percent), but the slow pace of job creation is a major concern for millions of Americans.
"Too many folks are still struggling to get back on their feet," Obama said in his address.
The challenge for the president and other policymakers is what to do about the problem.
Federal stimulus programs since 2008 may have helped to stabilize the economy and to coax a recovery's early phase, but economists are divided over whether more federal spending or tax cuts would help the economy now. A key worry is that, with the national debt high and rising, bigger deficits might do more harm than good.
Moreover, the case for new stimulus may be a political non-starter, with congressional Republicans focused on winning big cuts in federal spending before they agree to raise the limit on borrowing by the US Treasury. The US recently reached its current limit on federal debt, set by Congress at about $14.3 trillion, nearly equal to a year's economic output for the nation.
Still, economists say policymakers can consider steps that would help job growth. The president echoed that idea – pledging to seek answers from private-sector advisers on Monday and talking up some new steps he has taken.
Obama said government can't be the main engine of job creation. "But one thing government can do is partner with the private sector to make sure that every worker has the necessary skills for the jobs they’re applying for."
One example: Obama announced this week that US community colleges are creating a new manufacturing credential that will have the industry’s stamp of approval.
"If you’re a company that’s hiring, you’ll know that anyone who has this degree has the skills you’re looking for," he said in his Saturday address. "If you’re a student considering community college, you’ll know that your diploma will give you a leg up in the job market."
The president's Jobs Council is headed by General Electric chief executive Jeffrey Immelt.
Other groups, from think tanks to business associations, have also been rolling out proposals to boost job growth. One study, released by the research arm of the McKinsey consulting firm, cited job skills as one of four major areas where progress is needed.
New skills by themselves aren't a guarantee of new jobs, but the report projected shortfalls in trained workers in some important industries. Other key steps could include measures designed to boost business investment and to reduce regulatory hurdles that employers face.
Obama's meeting Monday will come at a delicate moment for the economy.
Most forecasters see the current weakness as temporary, and predict that consumers and businesses will be slowly spending more as the year goes on.
But high energy prices remain a problem. And potential trouble spots have emerged, including a continuing decline in home values and the possibility of slower growth in key global markets including China (trying to curb inflation), Japan (struggling after its major earthquake and tsunami), and Europe (wrestling with how to resolve a debt crisis in some euro zone nations).
Also, the Federal Reserve is winding down its program of bond purchases, known as "QE2" because it's the Fed's second round of so-called quantitative easing.