Update: Gallup Chief Economist Dennis Jacobe on Job Creation
We asked Dennis Jacobe, the chief economist at Gallup why he thought big business was adding jobs while entrepreneurial companies were shedding them.
He said, “I think the current job situation reflects the lingering effects of the financial crisis and efforts to deal with it. Historically low interest rates and the associated efforts to pump money into the economy, are now producing uneven global growth. Larger companies have access to the credit markets; are building strong cash reserves; and are experiencing strong global demand for commodities and capital goods. Smaller entrepreneurial companies have not recovered full access to credit, nor have the benefited significantly as a group from the global commodities boom. At the same time, the federal government’s ability to run deficits has allowed it to expand spending while the remainder of the government sector had had to pull back.
While it appears large company and federal government hiring is sufficient right now to produce minimal new job creation, the economic challenge today is to find a way to get America’s entrepreneurs and small businesses once again creating jobs. This is a major challenge given the blunt nature of fiscal and monetary policy, but the only way we are going to see sufficient job creation is to get the employment rate back down to acceptable levels in a reasonable amount of time.”
How did Gallup know to compare job creation in large organizations and small businesses? Said, Mr. Jacobe “We have several jobs measures including the Job Creation Index, Underemployment, and our Small Business survey. We asked this additional factor to the survey to see if it would help us reconcile the jobs data we are getting from different sources.”
Tags: budget deficit, financial crisis, global commodities boom, job creation
