Geithner Expects U.S Job Growth by Spring

The 2008-2009 recession has resulted in the loss of a staggering 7.6 million jobs, with the U.S. unemployment rate rising to 10.0%. However, job lay-offs have been trending lower for roughly a half-year, with the economy losing just 11,000 jobs in November.

Economic/Political Analysis: As noted, job growth remains the key for a sustained U.S. economic recovery. Although the U.S. economy can grow for several quarters without job growth -- as it did during 2002 -- long-term, a 2-3 year expansion is not possible without a net increase in jobs, and the increase in household formation it implies.

Further, job growth will also likely determine the fate of the Democratic Party's majority status in Congress, and, down the road, the fate of the Obama administration. Other issues can always pop up (inflation, unforeseen international events/crises etc.), but historically the economy -- and in particular the unemployment rate -- has correlated with how the American people rate the majority party's performance in Congress, and the president's performance. Lack of job growth would result in a failing grade for the Democrats and would result in the party losing more than the 10-14 House seats the party in power typically loses in an off-year Congressional election. The Democrats would also likely lose at least 1-2 Senate seats.

Conversely, strong job growth will result in a good grade for the Democrats, and the loss of only a few House seats -- or perhaps none -- during the off-year election up ahead in 2010. Under this scenario, the Democrats would also retain their current 58-seat majority in the Senate, and perhaps gain a seat.

Hence, the advise to Secretary Geithner and the Democrats is obvious: after the passage of health care reform, job growth should become the Democrats' No. 1 task.

Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.