As the Economy Slows

The economic news — on growth, consumers, housing and manufacturing — was bad enough before the jobs report for July, released last Friday. The report leaves no doubt that a slowdown is well under way. The odds of renewed recession remain uncomfortably high.

And yet, the response from Washington has been inadequate, at best, with Democratic initiatives too timid and Republicans bent on obstruction. When legislation does emerge from the gridlock, it is invariably a disappointment in the face of a dissolving recovery.

Case in point: Another 131,000 jobs were lost in July, according to the latest employment report, and job loss in June was revised to 221,000, from 125,000. The unemployment rate held steady, at 9.5 percent, but that is only because 181,000 people quit looking for work last month.

Such “missing workers,” those who either have dropped out or have never entered the labor force since the recession began, now number 3.9 million. That’s on top of 14.6 million officially unemployed and 8.5 million who are working part time but need full-time jobs.

There is no positive spin for this. Many of the recent losses resulted from the end of temporary jobs with the Census, but private-sector employment has also slowed sharply. At the same time, huge budget shortfalls have led to escalating job loss among state and local government workers. Against that backdrop, the Senate passed a bill last week — just before its summer break — to provide an additional $26 billion in aid to the states, including paying for 140,000 teachers. Speaker Nancy Pelosi called the House back from vacation, and it is expected to approve the aid this week.

What gets lost in the frenzy is the fact that the measure started out as a $50 billion effort — divided between help for states to pay their share of Medicaid bills and aid for education. At that level, it was a reasonable response to anticipated budget shortfalls estimated at well over $100 billion this year. Now, deep spending cuts and tax increases will still be needed to balance budgets, undermining the recovery.

Worse, the bill was scaled down as it was becoming increasingly clear that the economy was deteriorating, a sign of the rift between policy making and reality.

The Senate left town last week without passing a modest bill to spur small-business lending. Republicans used delay tactics to block a vote. Now the bill will not move until fall, a setback that could ripple through the Senate calendar, putting other plans to create jobs in energy and infrastructure in legislative limbo.

With unemployment persistently high, the economy is losing whatever momentum it had after last year’s stimulus. Recovery, such as it is, appears to be a repeat of the lopsided growth of the Bush years, with corporate profits rebounding and jobs and incomes lagging. Back then, policy makers advised patience, saying that with time, economic gains would distribute themselves more evenly. We know how that ended.

There is no one way to foster job growth. There are many ways, and they should all be deployed. Maybe after Congress gets back from vacation.