This morning's January jobs data marks five consecutive months of declining unemployment and the biggest tally of job creation since last April. Now more than ever you might get the feeling that President Obama had it right when he said "America Is Back" during the State of the Union address.
But are we? While the 8.3% unemployment rate is statistically the lowest level since February 2009, even the most optimistic prognosticators agree that it's still too early to say we've cleared all hurdles on the road to recovery.
Vincent Reinhart, Chief U.S. Economist at Morgan Stanley and the former Director of the Division of Monetary Affairs at the Federal Reserve says the data ''quite robust" but cautions not to get too excited.
"From our perspective, you need to take a break, take a breath, and think about the medium term pressures on the U.S. economy," Reinhart says in the attached video. "Households are still under pressure to de-lever, we still have unfinished business left from the financial crisis, and mortgage dislocations remain pretty severe."
Amidst an uncertain backdrop and a sluggish forecast for GDP growth that will average about 2% over the next 2 years, Reinhart concedes that some signs are encouraging, but warns "there's still reason for investors to lack conviction."
Reinhart's primary concern is that we are still our own worst enemy. He's worried that we could hurt ourselves again by hitting another self-inflicted fiscal pothole, and points to Congress's inability to pass more than just two months worth of clarity on payroll taxes.
"There are lots of things we could do to make progress in spurring job creation and wealth creation, but the fact is, Congress is gridlocked," he says, so don't expect a whole lot more.
Overseas, seven different national elections in Europe, as well as our own, also have the potential to "intrude" on our nascent recovery, Reinhart says, and will be "sources of risk that will play out over the course of 2012."
What do you think? Is enough being done to boost the economy and create jobs?
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