The jobs report today confirms what most have feared, the “New Normal” is now normal.  Gone are the days of full employment, which was taken to mean unemployment of 5-6% at any given time since that covered the normal gap incurred when labor moved from one job to another.  The jobs report today showed that during the last three months the increase in employment did not even cover the growth rate in our population, much less cut into the 8 million jobs lost in 2009.  So hello “normal” unemployment of over 8% and poor job prospects for entrants into the jobs market, e.g. recent college grads.

Hard to understand when the Obama administration has taken all the usual medicine to cure the malaise of the economy.  But it has not worked.  And while the patient has not died, he certainly is not doing well. 

Time for a change.  Time to examine other remedies.  There are those who argue that higher deficit spending by the Feds with the implied higher growing national debt is the cure, i.e. more of the same.  There are those who argue that cutting taxes and leaving more money in the hands of those who earn it to spend is the right way to go.  I argue for recreating the mountain of debt we built up to 2007, since that was the fuel that kept us at full employment until 2008. 

But I fear that none of the above will do the job.  In today’s world of focused attention on the Feds’ deficits and debt I don’t see how you can get any higher deficit spending through the Congress.   As for leaving more money in the pockets of those who earn it, I don’t see them pumping it into the economy, unless you drop capital gains taxes all together, which I am confident would generate amazing growth in investment.  And as for my remedy,  alas I believe the consumer is deadly afraid of incurring more debt, since he is still trying to “deleverage” his finances, i.e. pay down his debt.  I say this because interest rates are at historic lows for mortgages, auto loans, credit card debt, you name it.  But few, including yours truly, are taking this magnificent offer.

So what to do?  I guess in the absence of any new miraculous cures, we will have to learn to live with the “New Normal” now become the normal.