High Unemployment Smothering U.S. Economy

The idea that the American economy is sluggish because of a ballooning federal budget deficit is a complete and total farce, says co-founder and co-editor of The American Prospect magazine, Robert Kuttner.  The real reason, according to Kuttner and many economists is that the economy is slow because of high unemployment.

“For months, we have been hearing that businesses have been putting off making new investments or hiring new workers for fear that Congress would fail to cut the federal deficit,” wrote Kuttner in an op-ed featured on The Huffington Post. “The austerity lobby helpfully put reporters in touch with businessmen who claimed that the uncertainty about the budget was dampening their willingness to expand. But this turned out to be just about total baloney. During the months when the Congress and the press kept everyone on the edge of their seats wondering about the dreaded fiscal cliff, business behavior went on as normal — and a mediocre normal at that.

“To the extent that the economy has remained stuck in first gear, it has everything to do with high unemployment and lagging wages, and just about nothing to do with the fiscal cliff or worries about the debt ratio 20 years down the road.”

The U.S. Labor Department reports only 155,000 jobs were created last month. The Economic Policy Institute estimates that at this rate, “this kind of growth is not going to dig us out of our jobs hole of nearly nine million anytime soon.”

Meanwhile, new reports show the skyrocketing unemployment levels that have plagued military veterans are finally on their way down. The jobless rate dropped to an annual average of 9.9 percent last year from 12.1 percent in 2011. Good, but not good enough, warns veteran advocates. The veteran unemployment rate is still well above the national rate of 7.8 percent and as the Afghanistan War comes to a close, over 300,000 more veterans are expected home each year for the next four years.