“I have already directed my economic team to come up with an Economic Recovery Plan that will mean 2.5m more jobs by January of 2011”. Barack Obama chooses his words very carefully. What the US president-elect has not promised is the “creation” of 2.5m new jobs. Nor will millions of jobs be “saved”. So what does 2.5m “more” jobs actually mean?

For example, more jobs might mean trying to put the current and soon-to-be unemployed back to work – in effect raising, or at least stabilising, the size of the workforce. Alternatively, Mr Obama may be saying that if 4m jobs are to be lost over the next two years (very possible at current run-rates), the number would be 6.5m without his recovery plan. Of course, under both scenarios the economy has benefited. But clearly the second outcome is horrendously more painful.

The trouble is, so strong are the forces swirling through the US economy that the new administration probably has little influence over which scenario will come to pass. Numerous academic studies conclude, however, that while job creation is pro-cyclical and job destruction counter-cyclical, periods of job destruction are the more volatile. So the job market could get much worse.

Finally, the Obama plan is on questionable theoretical turf. Obviously 2.5m additional paper-pushers, or 1,000-worker teams building 50 bridges-to-nowhere in each state, are not desirable. But even creating so-called productive jobs is problematic. According to micro-economic “search-matching” theory, hiring is a function of the availability of workers and the number of job openings at other companies. So a new job building a wind farm here could mean one less mechanic at a factory over there. Mr Obama is right to try to kick-start demand – and right to be vague about promises he may not be able to keep.

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