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Government job cuts create a historically slow recession recovery
While some raised taxes to try to plug the big gaps in their budgets, most were forced to cut spending deeply to reflect the reality that property tax revenue would be much lower for years to come.
At the federal level, the U.S. Postal Service has slashed thousands of jobs in what appears to be a slow death spiral, but net federal job losses since 2009 have been comparatively small, at 36,000. Still, layoffs at the federal level are expected to continue or even accelerate as Republicans in Congress appear bent on chipping away at the bureaucracy by maintaining across-the-board spending cuts in defense and domestic programs next year.
Federal contractors have taken some of the brunt of federal cuts, laying off thousands of employees. Even so, the number of private-sector jobs created — the economy is averaging about 125,000 monthly — has been robust compared with the rate during the recovery from the recession in 2001, when 72,000 jobs were created on average each month, Mr. Perry said.
“We should recognize that this recovery is different” than anything seen in the postwar era because of the dramatically changed role of government, he said.
“Perhaps the significant downsizing of government at the state and local level is a positive development for the future growth of the U.S. economy, and one benefit of the Great Recession,” he said. “But we should also pay some attention to the fact that one of the reasons for the disappointing monthly employment reports is the persistent weakness in public-sector employment.”
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