The U.S. economy grew at the fastest rate since late 2003: 5.9% in the last quarter of 2009. So, where are the jobs?

The president of the Federal Reserve Bank of San Francisco, Janet Yellen, said Monday that businesses were reducing their inventories—not increasing sales—and that this explained the recent economic growth. According to NPR, consumer spending weakened last quarter, even more than the government initially expected. Yellen noted that her

“business contacts describe this as a paradigm shift and they believe it’s permanent.”

Businesses are cutting back, and their actions don’t look temporary.

Last month, the U.S. Conference of Mayors predicted that unemployment rates will not return to pre-recession levels during the next three years for any metro area.

In the past, overall economic growth would create jobs. It now appears that the relationship between growth and job creation has been lost, or at least dramatically changed.

The Great Recession has solidified the various forces that have been shaping the U.S. economy over the past 40 years. We now face a fundamentally different economy, characterized by an extended period of joblessness and underemployment for at least the next several years. (See these excellent pieces here and here.) We may simply have a new floor for unemployment.

We know how to create some short-term jobs and temporarily mitigate the worst effects of the crisis, even though Congress has yet to show the political will to enact these critical policies. But we do not yet know how to deal with a fundamentally different economy characterized by widespread, long-term joblessness and underemployment. As progressives, we need to come to terms with these changes and develop solutions to address them.

Alan Charney is Strategy and Policy Director at USAction.

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