The job market entered a tipping point last month as the economy has stopped creating jobs. The tipping point took place after three months of increasing exhaustion in the job market in which the economy created less than 100,000 jobs per month. The number of jobs created in July 2011 was revised downward to 87,000. There is a large chance that the August 2011 number will be revised downward to reflect that the job market collapse was in fact commencing last month. In spite of the latest developments, people in the mainstream media continue to show a lot of optimism, which is associated with positive social mood that occurs in a big wave 2 in a bear market.
The next leg down in the job market is in progress, and the forecast is for the economy to wipe out 36 million jobs over the next 5 years, pushing the unemployment rate up to 40% (U6) by 2016. The mass destruction of jobs will unfold in tandem with Primary wave  down (2011 - 2016) in the DJIA and the S&P 500.
We are still in the early part of Primary wave  down (2011 - 2016). Here is an updated chart of the DJIA, reflecting the social mood of the United States population.
We are still on track to complete Minor wave 1 down by early October 2011. There is no question that Minute wave [v] down is in progress. A relatively fast downward impulse is in the forecast for September 2011. The projected downside target for the end of Minor wave 1 down is 10180 for the DJIA and 1040 for the S&P 500.
After the October 2011 low, markets will rally for the rest of the year with the peak of Minor wave 2 up to occur in early January 2012. The target for the peak of Minor wave 2 up is 11850 for the DJIA and 1250 for the S&P 500.
The projected social mood of the United States population during September 2011 is important here as it will determine the outcome of any attempt by the Obama Administration to pass a job creation bill. We already know about the jobs speech that President Obama is about to do on September 8, 2011.
As usual, we are seeing optimism associated with a big wave 2 in a bear market as the mainstream media continues to express optimism on the chances of getting a job creation bill passed through Congress. The optimism, however, is in contrast to the increasing polarization in politics that we have been seeing in the last 2 years as the GOP continues to accelerate farther to the right. The political arena is more polarized now than it was when the debt ceiling crisis was unfolding. As the bearish social mood continues to build throughout September 2011, the result is increasing polarization, increasing discord, and an increase in the "us vs. them" mentality in which people and groups attack opposing groups (the vitriol in the political arena last month testifies to this). With the effects of increasingly bearish social mood on the political arena in mind, there is no chance that a job creation bill will be passed through Congress.
Although many progressive groups have been urging the Obama Administration to directly intervene and put the unemployed back to work, there is no basis for such an event to happen. Let's consider a historical perspective on the matter of direct government intervention in the job market with the intent of putting people back to work.
1 -- The New Deal -- It was launched in 1933 by the FDR Administration after the Great Depression ended earlier that same year.
2 -- Reconstruction -- It was launched in 1865, after the Long Depression ended in 1859.
3 -- Hamiltonian Economic Program -- It was launched in the 1790s, after the "Modern European Major Depression" ended in 1784.
The pattern is very evident -- direct government intervention aimed at putting the unemployed back to work took place after the bear markets ended. With that in mind, we should not expect the Obama Administration to intervene in terms of putting the unemployed back to work. The "Second New Deal", if it happens, is most likely to be initiated in the year 2060, after the current major depression ends in 2055.
Government intervention aimed at putting the unemployed back to work is not guaranteed anyways. The idea that governments can influence the economy is a product of the Keynesian economic model. Major depressions always result in dramatic changes in the character of nations and the character of a nation's government. A case of point is the Renaissance. Both of the economic depressions that occurred during the Renaissance are easily identified -- the first occurred from 1470 - 1484, and the second occurred from 1637 - 1648 in the aftermath of Tulipmania. In both of the cases, the government did not intervene to put the unemployed back to work after the depressions ended, but there was still a vigorous economic recovery that followed the end of the depressions. It is quite possible that the Keynesian economic model will get scrapped altogether in the late 2050s or early 2060s, being seen as a failed model that is riddled full of flaws.