Even if President Barack Obama can win political support for a sweeping new government program to create jobs, he may have a tougher time providing more than a temporary, quick fix, say economists.
The real problem, they say, is that households and governments are still recovering from the widespread damage done by a historic borrowing binge that will take years to repair.
The details of the White House’s jobs proposal, to be laid out in a much-anticipated speech Thursday night, are still being finalized. The plan is expected to call for increased federal spending to rebuild roads, bridges and other infrastructure across the country. Republicans, who control the House of Representatives, so far have rejected the idea as wasteful spending.
In any case, more fiscal stimulus may not be enough to fix what ails the U.S. job market, say some economists. A decade of unsustainable borrowing by consumers and governments artificially boosted economic demand. The resulting debt hangover has sharply curtailed spending.
“You can’t manufacture demand if you’re going to look at demand from the same place as we always have gained demand, which is through the consumer sector,” said Steven Blitz, senior economist at ITG Investment Research. “That’s because the consumer is tapped out.”
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