Stocks Matter, But Jobs Matter More
For anyone with an interest in the Great Depression, certain phrases set off chills. So when Anthony M. Santomero, president of the Philadelphia Federal Reserve Bank, declared this week that economic recovery was "just around the corner," he must have been unaware that he was paraphrasing Herbert Hoover.</br></br>The Federal Reserve's interest rate cut on Wednesday may, temporarily anyway, restore some of Fed Chairman Alan Greenspan's popularity. Accused of foot-dragging on the matter of priming a sluggish economy, Greenspan now seems in a full-speed-ahead mood to get things moving again.</br></br>But the Fed's action also is a sign of how worried the economic masters of the universe are about our nation's slowdown. In the dry language of Fedspeak, "the risks are weighted mainly toward conditions that may generate economic weakness in the foreseeable future." If a good inflation-phobe like Greenspan believes this, it's hard for anyone to disagree.</br></br>The question is whether our sustained national experiment with very low unemployment is about to end. The unemployment rate has spiked up, and the news of layoffs suggests the numbers are likely to get worse this year. For all the media focus on stock prices, it's unemployment that has real human and social impact.</br></br>With all those cable stations running the market ticker at the bottom of their screens all day long, it's hard to remember that in the economic lives of most people, stocks play a limited role. As David Leonhardt of the New York Times put it this week, "Relatively few Americans rely on them for a significant portion of their income." It's an antique notion, I know, but jobs really matter.