The Road Ahead for Growth and Jobs

From CEA Chair Christina Romer delivered comments on today's employment numbers:

The unemployment rate remained at 10.0 percent in December.  This level reflected a proportional decline in the number of people unemployed and the number of people in the labor force.  The unemployment rate remains unacceptably high, which underscores the need for responsible actions to jumpstart private-sector job creation.

As the President has said for a year, the road to recovery will not be a straight line.  The monthly employment and unemployment numbers are volatile and subject to substantial revision.  Therefore, it is important not to read too much into any one monthly report, positive or negative.  It is essential that we continue our efforts to move in the right direction and replace job losses with robust job gains.

Sounds like an increasing appetite for more growth and job creation activities. Steven Pearlstein, writing on Wednesday in the Washington Post, discussed the apparent weakness of most potential sources of growth, and laid out an agenda for going forward:

Most important would be for the federal government to step up its spending for infrastructure, basic research, clean-energy development and expanded public higher education. After 20 years of badly underfunding public investment, the first stimulus package was a step in the right direction. A second package would create additional high-paying jobs now, while generating higher growth and tax revenues for decades. A boost in government investment would also provide the perfect political cover for moving aggressively to reduce the government's "consumption" spending by reforming entitlements, reducing farm subsidies and business tax breaks, and eliminating underperforming social and military programs.

Given how we got into this mess, we're probably stuck with several more years of slow growth in jobs and income. The only important question is whether we'll use this opportunity to lay the foundation for another generation of sustained prosperity, or get sidetracked by chasing after short-term stimulus and overzealous deficit reduction.