President Obama can authorize billions to banks, put pressure on mortgage holders to cut deals and open the nation’s wallet wide for clunkers. He can even hold a farcical “Jobs Summit” to put a dent in that 10% unemployment rate.
What he can’t do is get out of his own way.
Why aren’t businesses hiring? Because they don’t know what’s next. The small shop owners, mid-size company budget planners and corporate strategists — they all look ahead and see nothing but questions and worries. What will the massive new health care bill cost? Will there be cap-and-trade taxes after the Copenhagen summit this week? What domestic priority will Obama push next?
If you don’t know what a new employee will cost you in 2010, the last thing you want to do is hire one.
“Shovel-ready” stimulus jobs have fallen far short of expectations, as most of those dollars haven’t been spent. The positions that were created, meanwhile, aren’t the ones that support sustained consumer spending, the juice our economy needs.
The jobless rate may have fallen to 10% — causing Obama to crow Friday that it was “the best report since 2007” — but it’s unclear if this is a trend. Once benefits run out for the recently unemployed, and seasonal workers are back on the market, who knows where the number will go? Meanwhile, if you add in the “marginally attached workers” and people “employed part time for economic reasons,” the total unemployment rate is closer to 17%.
Meanwhile, none of the policies Obama is likely to outline in a Tuesday speech — or include in a new jobs bill to Congress — are likely to get people off the unemployment lines. Cash incentives to fix up your home with energy-saving materials? Really?
Obama knows he’s hamstrung here. “Ultimately, true economic recovery is only going to come from the private sector,” he told his Jobs Summit this week.
That White House shindig of 130 big thinkers and top executives — many of whom have laid off tens of thousands in the past year — brainstormed ideas on how to stop the worst job loss since the 1930s, and keep people from voting Republican in the next election.
But hiring grows from investing, and companies won’t invest when the spreadsheets have too many variables to model.
Another big problem: While credit markets have recovered for large companies, even bullet-proof credit can’t get smaller businesses the bank loans they need to grow.
Who can blame the banks at this point? Giant names like Wachovia, Bear Stearns and Lehman Bros. are now on gravestones because they failed to model their risk and were consumed by their own greed.
Banking today is about the safest returns to maintain the highest capital ratios to chill out regulators and assuage shareholders.
What’s out of that picture is Risk, even “lower-case ‘r’ ” risk, and until we all start feeling better about our budget deficit, the long-term costs of health care change and the leverage held by Asia ownership of our national debt, fear remains the shot-caller in this ride.
Last week’s $60 billion debt bomb in Dubai proves that the banking blowout may have a sequel, or at least a direct-to-cable disaster directed by Jerry Bruckheimer.
Where are the new jobs? It’s places like the Texaplex, the triangle between Dallas, San Antonio and Houston where by some counts half of the all the new US jobs have been created in the past few years.
It’s a sauce of no income taxes, business-friendly laws for worker compensation, litigation and taxes, cheap land and even cheaper labor. In short, the opposite of what most areas of the country — not to mention the federal government — are doing.
Many point toward the comparative fiscal restraint of the Clinton years as a catalyst for for brisk job growth of the 1990s. It made foreign buyers happy to pick up our debt. But our ballooning bailout and ambitions for more government frightens those same investors.
All this weighs on American business. The decision to add payroll has to be backed by hard numbers; great speeches don’t make great quarters on Wall Street or Main Street.
The early returns from Black Friday holiday shopping suggest Americans are getting ready to spend again. But the core of the American job machine remains with small business owners and department heads and C-level suiteholders. All the think tanks and union heads and Jobs Summits can do is create plenty of happy soundbites about policy tweaks.
We don’t need another government stimulus program either — another rounding error that does little but scare our debt holders and keeps state budgets fat.
Jobs will come when credit loosens to the lowest rungs and businesses are sure government won’t go on another drunken binge.
Obama wants change. Businesses need certainty.
Eric Torbenson is a business writer in Dallas.