President Barack Obama was on the road this week delivering speeches aimed at accelerating the country's economic recovery. Despite a strengthening housing market and slow but steady job growth, the president says political gridlock and rising income inequality threaten the American way of life. The country has made progress since the recession, but still has much to do regain solid economic footing.
When Obama took office in 2009, the economy was losing an average of 700 thousand jobs a month. The housing market had collapsed, the stock market was in free fall and, by year’s end, unemployment had reached 10 percent.
But fast forward to 2013: home prices are rising, stock prices are near all-time highs, and companies are hiring an average of 200 thousand workers every month.
“Add it all up and, over the past 40 months, our businesses have created 7.2 million jobs. This year, we are off to our strongest private sector job growth since 1999,” said the president.
And yet, despite the steady pace of hiring, nearly 12 million Americans are still out of work. On average, those who have found jobs are working fewer hours and earning less, even as the average pay for CEO’s has risen by double digits.
“The growing inequality isn’t just morally wrong, it’s bad economics because when middle class families have less to spend, guess what? Businesses have fewer consumers,” said Obama.
Analysts say the president’s focus on the economy may be a pre-emptive strike to pressure Congress to act. He wants lawmakers to reform the tax code, boost infrastructure spending, raise the minimum wage, and start implementing his health care reforms.
Given the political climate in Washington, agreement may be unlikely.
But one issue that could unite both parties is the need to broaden the tax base. That’s why immigration reform is crucial, said Steve Bell at the Bipartisan Policy Center in Washington. “If we don’t have intelligent immigration, we are not going to have enough workers to pay the taxes we need for the programs we have in place now,” he said.
Moving forward, other factors could have an adverse impact on U.S. growth. They include a slowing Chinese economy and an extended recession in parts of Europe. And here in the U.S., a new survey by the National Association for Business Economics suggests rising interest rates and a looming budget battle in Congress over the debt ceiling could slow the pace of hiring - just as the U.S. economy is beginning to gain momentum.