Jobs, jobs, jobs! That's what we'll hear from now on through the 2012 election, and rightly so. Although they claim otherwise, Wall Street and the Big Banks are not the essential, indispensable, must-be-bailed-out part of the national economy: it's people with jobs. Those people account for 70 percent of the economy (the government is 20 percent).
As we've already seen, those people aren't spending very much money these days, needing no more time-share condos, full-size SUVs, leather furniture, and flat-screen TVs. Which means there are fewer jobs for the people who were making those things a few years ago.
The national economy grew at a modest annual rate of 1.3 percent in the second quarter of this year, better than the 0.4 percent of the first quarter, but there is some cause for anxiety: personal spending was flat in the second quarter, after growing between 2 and 3 percent in 2010.
Will this situation improve or get worse? It will improve, but slowly. The machinations of Wall Street and the perils of budget cutting and the debt ceiling fortunately have nothing to do with the basic desire of people to buy goods and services. The evidence suggests strongly that personal spending will rise. And once consumers again feel comfortable with their credit card balances (probably next year), they'll start to spend at an accelerating clip, which in turn will mean even more jobs.
The evidence to back up all this easy talk lies in the job statistics for June. Overall, jobs were up just 1 percent over last year, but two things were especially important. Retail jobs were up 1 percent, a very good indicator because stores don't hire if people aren't buying; 1 percent is the best growth in four years. The other important indicator is temporary jobs, down 40 percent in the recession as companies quickly cut them, but rebounding 27 percent in the last two years. These jobs are the canary in the coal mine (even small amounts of methane gas will kill them) and they keep growing.
The economy will keep growing. But slowly, at least for this year.