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The big question is whether boomtowns like Austin are mere islands while job growth remains underwater elsewhere. Unemployment figures show that aside from manufacturing, a lot of the major job growth is in such sectors as health care and tourism. This is a reminder that many of the other fastest-growing segments of the economy represent mainly low-wage jobs that haven't been exposed to global competition.
And there's still that refrigerator on our backs known as the housing market. In the past, consumers typically piled into housing after a recession, which helps power recovery and build wealth. Instead, we're over two years into a recovery and we still need to pay down $3.7 trillion in mortgage debt just to get back to normal loan-to-value ratios, says St. Louis Federal Reserve president James Bullard.
As Warren Buffett and other sages have said, if housing recovers, the American economy will truly begin to feel like it's in recovery. But when it does--be it a year from now, or three, or five--the problem that precipitated it will still be with us. We got into the housing mess because we used our homes like ATMs to cover up the fact that neither incomes nor jobs have grown as much as they should have in the past two decades. It was a myth we all bought into, from the policymakers who pushed the idea of an ownership society fueled by debt to interest-rate-lowering central bankers who kept the music playing to individuals who took the mortgages they knew they couldn't afford.
All that is over now--there are no tools left to goose the economy falsely to life. So we're back to the big, fundamental challenges to turn this expansion into something more robust: improving education, bridging the skills gap, churning out a new labor force that can really compete at a global level, simplifying the tax code and making sure our regulations are as streamlined, and smart, as they can be. Every true boom in this country has been preceded by a burst of job-creating innovation. As the record profits and global expansion of companies like Apple have shown, there's plenty of innovation still happening in America. The trick is to create an environment that ensures that the jobs that come from it stay here too.