US GDP exploded in the final quarter last year, growing by a whopping 5.7 percent, the fastest rate in 6 years. But that did not stop 2009 being the darkest year for the US economy as a whole in 64 years.
The economy shrank 2.4 percent despite that breakneck year-end, and the true strength of recovery is masked by the fact that much of the growth is accounted for by firms rebuilding inventories they had run down to the bone.
Once restocked, that is it, and sustainable new growth will have to come from elsewhere, like consumers. They account for 70 percent of US economic activity, so their spending is crucial. And they can only spend if they are working.
So on Friday night President Obama announces a whole raft of pro-employment measures, including tax breaks for small and medium-sized companies that hire workers, and those who raise wages. Until now the US recovery has been slightly atypical in that it has been a jobless recovery. Obama is looking to repair the US economy’s traditional ability to create jobs as fast as it destroys them.