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Manufacturing, construction and job quality
Going forward, the economy will add some jobs for college graduates with technical specialties in finance, healthcare, education and engineering. However, for high school graduates without specialized technical skills or training and for college graduates with only liberal arts diplomas, jobs offering good pay and benefits remain tough to find. For those workers, who compose about half the working population, the quality of jobs continues to spiral downward.

Historically, manufacturing and construction offered workers with only a high school education the best pay, benefits and opportunities for skill attainment and advancement. Troubles in these industries push ordinary workers into retailing, hospitality and other industries where pay often lags.

Construction employment fell by 82,000 in November. This is a terrible indicator for future gross domestic product growth. Retailing shed 91,000 thousand jobs, and financial services lost 20,000 jobs.

Manufacturing has lost 85,000 jobs, and over the past 104 months manufacturing has shed more than 4 million jobs. The trade deficit with China and other Asia exporters are the major culprits.

The dollar is too strong against the Chinese yuan, Japanese yen and other Asian currencies. The Chinese government intervenes in foreign exchange markets to suppress the value of the yuan to gain competitive advantages for Chinese exports, and the yuan sets the pattern for other Asian currencies. Similarly, Beijing subsidizes fuel prices and increasingly requires US manufacturers to make products in China to sell there.

Ending Chinese currency-market manipulation and other mercantilist practices are critical to reducing the non-oil US trade deficit and instigating a recovery in US employment in manufacturing and technology-intensive services that compete in trade. Neither President George W Bush nor congressional leaders like Charles Rangel and Chuck Schumer have been willing to seriously challenge China on this issue, and Senators John McCain and Obama appeared comfortable with continuing their approaches during the campaign.

Now Obama must alter his position and get behind a policy to reverse the trade imbalance with China - or preside over the wholesale destruction of many more US manufacturing jobs. These losses have little to do with free trade based on comparative advantage. Instead, they deprive Americans of jobs in industries where they are truly internationally competitive.

In the end, without assertive steps to fix trade with China, as well as fix the banks and curtail oil imports, the Bush years will seem like a walk through the park compared to the real income losses Americans will suffer during the Obama years.

Instead, were the trade deficit cut in half and the banks fixed, manufacturing would recoup at least 2 million jobs, and US growth would exceed 3.5% a year. Real wages and domestic savings would climb, and the federal government would receive more revenues to balance its budget or address other pressing domestic needs.

The choices for the new president are simple. It's either renaissance or decline. Fix the banks, trade with China and adopt a realistic energy policy or become America's Nero.