Despite a 5.7% annualized growth rate in the last quarter of last year, unemployment still stands at a sobering 9.7%. How can GDP grow so much without creating new jobs? It’s simple. During the economic downturn companies stored up their surplus goods – brought on by a substantially decreased demand – in inventory. That 5.7% annualized growth reflects a lot of inventory sales – things already produced before and thus not needing any new labor.
Barack Obama has said that his number one priority this year is job creation, a noble goal. But Obama’s economic advisers also predicted that with the stimulus, unemployment would max out at 8%. They also predicted that without the stimulus, unemployment would reach as high as 9%. Looks like we’ve got worse than both predictions. I am eager to see what Obama’s plan for job creation is. Meanwhile, my skepticism of stimuli’s solvency continues.