There are many metrics used to measure the size and success of an economy, and just as many metrics available to measure economic recovery. But the most important to the general public and the unit of measurement that receives the most publicity is job growth.
Every month the government releases a report detailing how many new jobs have been created that month and compares that figure to the previous month to measure immediate change and to the number of jobs created that same month but one year prior to compare change in the long term.
But how are jobs created? What do these numbers depend on? And what needs to happen for these numbers to grow?
It is easier to notice the absence than the presence of these factors. When an economy is good, people go on with their business, but when an economy is bad, analysis is ordered to pinpoint the exact cause.
A lower than expected number of jobs was created in May of 2012, as in any case when news is bad, the first few days of the succeeding month are spent searching for answers.
One of the factors that contributed to a slow month in economic recovery is the parallel recession in Europe. Because the United States does indeed depend on other countries for industry and trade, the economic status of one country affects all of the countries it does business with.
Currently, many countries in the Euro Zone such as Greece, Portugal, and Ireland are suffering economically and are facing or experiencing austerity measures. And because the Euro Zone is a union that is predominantly tied by a common currency, the Euro, the failing economies of even small countries must be “bailed out” so not adversely affect the economies of the other countries and of course help the citizens of those countries.
But with money being spent on bail outs, there is less money to be spent on industry and less industry in existence because the economy is doing so badly. This means that US factories get fewer international orders, so there is less need for additional jobs.
Europe’s struggling economy negatively affects the United States’ struggling economy which slows down momentum for our recession recovery. In prosperous times such a symbiotic relationship is good for the US, but when times are tough, economists and policy makers wish we were self-sufficient.
It is safe to say that the United States and the country’s most important metric can only fully recover when all of Europe’s struggling countries follow suit and the horrible inflation that plagues them, ceases.