The economy appears to be humming, but lots of people aren't hearing a very pleasant tune.
The latest good news: Businesses added 337,000 workers in October, an unexpectedly large burst of hiring. After months of subpar employment readings, that report from the Labor Department on Friday sent the stock market higher.
But many people are more focused on the many months of slow job growth this year, even though economic output is rising faster than normal.
So what's wrong? Why is a strong economy failing to produce enough jobs?
"We economists have been surprised that we haven't seen much job growth," said Bill Conerly, who follows the Northwest economy from Lake Oswego, Ore. "Usually, when you get the economy going into a recovery like we have, you get very strong job growth."
Indeed, by most measures, the economy is a picture of health. Growth is up 3.7 percent in the third quarter. Inflation is up only 2.5 percent from a year ago, counting oil prices. Even unemployment is low, at just 5.5 percent.
"If somebody went to sleep 10 years ago and woke up today, they would think this economy is great," said James Glassman, senior U.S. economist at J.P. Morgan Chase in New York. "The economy can't do better."
The answer lies in structural changes that have shifted the economy's goalposts, experts say.
Two main forces account for the shift: Welfare-to-work changes in the 1990s encouraged more people to count themselves as employed than did previously, Glassman said in an interview. That pushed up the level of employment being counted, even though many of those marginal workers aren't happy with their jobs or incomes.
Then there's technology. The Internet, computers, robotics and communications cut the number of workers needed in many industries. Productivity, the amount of labor required to produce a fixed amount of goods, has soared.
As a result, numbers that a decade ago described a roaring economy today signal anemia. The old measures of success no longer fit.
Making sense of today's economy requires new definitions of "normal" for growth, unemployment and inflation. And few people have made that shift in thinking, said Glassman, who spent more than a decade researching inflation and labor markets at the Federal Reserve in Washington.
It used to be that economists considered 6 percent as the lower limit of unemployment — so-called full employment. If joblessness fell below that magic number, inflation started to kick up as too many jobs chased too few workers. The economy needed to grow about 2 percent a year to meet that target.
But after the structural transformations of recent years, economy watchers like Federal Reserve Chairman Alan Greenspan suggest full employment may now be about 4 percent.
Today's economy has to grow much faster for employment to reach a level comfortable to workers. If the economy were a car, it has slipped into fifth gear but needs to accelerate before it feels like it's really moving.
"The only reason employment is not doing well is because the growth hurdle has been raised," Glassman said. "It's because of productivity, and you can thank Microsoft and Intel for that."
To reach a 4 percent rate of unemployment — or full employment — the economy has to rev up to 4 percent or more, about double the former "normal" rate.
And that level of growth will only keep up with the expanding work force, which grows by just over 1 percent a year, Glassman said. The economy needs to grow even faster to replace jobs lost during the recent downturn.
Other economists agree. "If we don't grow at 4 percent, we are growing 'disguised' unemployment," said Joseph Stiglitz, an economist at Columbia University, who won the Nobel Prize for economics in 2001.
The "disguised" group includes people on disability rolls, those in part-time jobs who want to work more, and discouraged job seekers who have stopped looking for work, Stiglitz said in an interview last week.
The next question is whether the economy can grow that fast.
Stiglitz said higher growth is "possible" but that the government needs to do more to stimulate the economy. He advocates a tax policy that boosts spending by businesses and consumers: tax credits for investment in new equipment and hiring, for example, rather than tax cuts for dividends. Or income-tax cuts aimed at the middle class, who would spend, rather than those in upper income brackets.
Glassman said the macro policies are already geared that way. They also give the Federal Reserve room to go easy on raising interest rates. The Fed is widely expected to raise short-term rates tomorrow.
"When inflation is not a threat, the central bank can be nurturing," Glassman said. "You don't have to be on the brakes anymore."
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