where are those jobs? let me show you how it breaks down. of the 243,000 jobs that were created, 257,000 jobs were created in the private sector. that's where everybody wants them created. you subtract the jobs that were lost by the government, 14,000, and you end up with that number, 243,000. let's talk about this with diane swonk, a chief economist, and with will cain and my good friend richard quest. what a treat to have all three of you with me in the studio. diane, these numbers are very strong. there's a disconnect between what some of our economic numbers and forks say and what the american consumer has been feeling. the american consumer has been telling us they have been feeling a little more energized about this economy and nothing helps them more than jobs. >> absolutely. this number is good and i want to underscore any way you cut the data, there's noise in it. you can take away some of the noise. we had people playing golf in chicago in january. that just doesn't happen in january. so there were some seasonal things. a lot of construction. even if you take all that out, it still is a good number. oh, thank god. you know, the only thing -- what you look at is where is the pain still. the pain is in the 42.5% that are still long-term unemployed. >> more than six months. >> that's not change, 5.5 million unchanged. so we're employing some people coming back into the labor force, maybe they're just graduating from college or deciding they're going to look for a job now. but the labor force did grow so people look for a job and got some jobs. we also are seeing in the breakdown of data, it looks like not shown in the overall data, but we're starting to see movement in small business creation and that's the backbone. new business formation. talking a lot of larger companies, they're not hiring out but they're starting to seed smaller companies for innovation. that's what you need to see for more sustained recovery. the world is not perfect. 8.3% unemployment rate -- >> still high. >> nothing to pop champagne corks over. >> still 50 million people still looking for jobs. still the problem of our time. even you have a hopeful view about this. you're sort of saying this is a long-term process, something that we all know but that the public demands faster results on. >> look, you'd have to be a partisan hack to spin that in the wrong direction. we're headed in the right direction. the most important number is that chart that shows growth over the long period of time. that being said, i think unemployment is unfairly or inappropriately treated as the economic scoreboard. economic scoreboard. there are so many other things going on, from private debt to gdp growth to indicate how people feel. and there are greater threats. from foreign policy issues like iran to china slowing down to the eu. these things will impact not only how the economy goes but how people vote. >> what a great way to get into our resident european. i will tell you, richard, there is even some theory, it's just been floated by a few people, that if our growth continues to be as strong as it is in the united states, rather than worrying about europe sucking america down again into another recession, it might be the other way, we might be able to help you folks out. how can we help you, richard? you need it. >> hey, hey, hey, one at a time, please, one at a time. look, i don't think you're going to be able to. i think with the euro zone and the european union being the second largest or the largest in the world -- >> we'll run with second largest. >> all right. there's nothing you can do about it because the problems in the eurozone are so deep, and they threaten to get worse and they threaten to get worse before they get better. and, and before you all start beating up on me, your growth is fragile. >> absolutely. >> there's no depth to it. >> we're sitting here celebrating what should be 500, 800,000 jobs a month. the threshold is easy -- the hurdle is easy to clear now in terms of what we've been through and what's good. >> and i would love to see europe having those sort of numbers instead of what i know is going to be the story in q1 of this year, which is higher unemployment, 10.4% within the eurozone. the u.k. is going to get higher. >> let me show you something. let me go back to the wall if i can for just a second. when we look at the jobs report and we are trying to parse them and find things not great, one of the things we want to look at is where the jobs are. look at manufacturing. it's always a pleasure to see manufacturing numbers go up in the united states, because for about 15 years we saw them going down. in january, 50,000 manufacturing jobs added. leisure and hospitality, 44,000 jobs added. some of that has to do with, as you said, climate, some of it has to do with currencies and where people are traveling to the united states from. retail trade was up 10,500. we almost thought we would see fewer retail jobs added post christmas. health care jobs which have continued every single month even through the recession, we added health care jobs, 31,000. and mining jobs were up 10,000. these are just a sampling, but generally speaking it was broadly spread. the question you mentioned it in your first response, is this kind of stuff sustainable? >> that's what's interesting. some of the leisure stuff was seasonal, construction was seasonal. manufacturing, a lot of it auto related and machinery. the good news of that is there is some onshoring going on and we're actually building up machinery for that. also machinery for those mining jobs. natural gas, we need machinery for that. automakers are opening idle plants retooling and buying machinery. retail trade, one of the biggest increases, automotive. auto dealers. >> we saw december, we saw record sales for automakers. >> well, not record. >> not record. >> we're excited, back below recover level -- >> and you're from detroit originally and you live in the midwest. when we talk about jobs the same way we talk about autos, we're not talking about records necessarily, we're talking about the new realities around them. so they weren't records, they were great numbers for this world in which we live. >> and some of the manufacturing jobs, some of that is catchup and some of it is really fundamental. that's good news. but there was a seasonal component to some of the other things. still a good number. still would love to see more. my forecast for the year, it's only 2.25%, i'm probably going to be marking it up. i'd love to eat crow but i haven't killed a bird yet. >> will. >> sir. >> we don't want to go -- there's enough politics on tv that you can watch and you are a great contributor to it, but if i were a republican -- >> there's too much politics on tv. >> how would i deal with this? this is really messing up my narrative. let me add something to this. if this pace of jobs creation continues, president obama will recover every job that was lost under his presidency by election day. >> okay. so here's the deal. i've told you over and over, i don't think the focus should be on jobs, i think it should be on debt. i don't mean federal government debt, i mean private market debt. to extend our battle across the pond, we're headed in the right direction on debt. these guys are headed in the wrong direction. they are leveraging up. >> whoa, whoa, whoa. no. >> your debt is through the charts. >> how can you say -- >> we are a highly indebted economy. deleveraging is not nearly as far along. >> what about these guys? >> so i'm on the titanic and you're on -- >> the disaster that killed 800 people. so the debt situation is still very bad. the political uncertainty, the inability to make -- we've got the end of year is enormous and we've got major drag on growth. >> agreed. >> because of that. >> hold that thought. very good distinction to make, by the way, between debt as all of us have come to talk about it, which is not the debt you're talking about. you're talking about people's debt, household debt, the degree we are indebted as individuals. being a much more serious problem, perhaps, than our national debt. stay where you are. richard, great to see you here. that's a great tie. we'll talk about that when we come back. will cain and diane swonk. it happens to be my tie he's wearing. americans want this economy fixed and they are ready to hit the ballot box to do something about it. is your vote going to make any difference and what's going to make you vote one way or the other when we come back. vacations are always wasn'ta good ideaa ♪ priceline negoti - - no time. out quickly. you're miles from your destination. you'll need a hotel tonight we don't have time to bid you don't have to bid. at priceline you can choose from thousands of hotels on sale every day. save yourself... some money how's it going? 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[ laughs ] [ male announcer ] red lobster's four course seafood feast is back. get soup, salad, cheddar bay biscuits, dessert and choose one of 7 entrees. four courses for only $15. offer ends soon. i'm jody gonzalez, red lobster manager and i sea food differently. two parties, one promise. whether you end up voting for president obama or the eventual republican nominee, both sides claim they have what it takes to fix the u.s. economy. but the director of the congressional budget office warned this week that despite all this optimism, america is many years away from an economy that's hitting on all cylinders. >> we expect economic activity to quicken after 2013, but will gdp to remain below the economy's potential through 2017. >> will, first of all, we don't usually have emen dorve on elmendorf on our show. >> he's a good guy and makes an important point. >> as excited as we are, it's legitimate to be excited about some of these numbers, bottom line is we are still well away from a real recovery and most thinking economists have told us that. >> that's right. >> there are unthinking economists? i hope i don't resemble that comment. >> they will tell you that it doesn't really have all that much to do with who wins in november. >> but it can have an effect. the historical averages on a credit bubble recession, when you've built up large amounts of debt, it's like seven years. in that process, if that's true, we're following that model, we're three to four years into a seven-year process. meaning expect three more years of slow growth out of this thing. what can politicians or how will your vote actually impact that? let me say this. short term, not a lot of things that can be done. i do believe and this is going to sound cliche, but conservatives believe in the principle of certainty. certainty on taxes. shouldn't have spent time working on health care, carbon trading, taxes. these things are distractions. long term i trust conservatives as stewards of the economy, long-term. but i don't want to overstate the short term things. politicians have limited control over. >> the one issue we've got is whether or not europe will mess things up for us. as you have observed astutely in your covering of this, it is -- talk about slow. we may be four years into a seven-year recovery, but europe seems to be taking four years to make a decision about what they are going to do. >> we are going backwards. we are going backwards. i always find it very dangerous to argue with somebody that might have a philosophical point of view, as my friend on the left does. no, my physical left, my physical left. but the battle that is now raging in europe between those that believe in full throttle austerity, to squeeze the countries of greece and probably portugal next and ireland and spain versus the those who are pushing really hard for it, versus those who now believe there should be some form of growth. the problem is it's all talk and not much action. the risk is still very real, and that's why the ecb basically lent half a trillion last time and it will do up to a trillion next time. >> diane, i saw you tweeting the other day when ben bernanke was talking about ben bernanke, which is why -- politics. >> he conceded this week that the recovery has been frustratingly slow, particularly on this intractable issue of getting people back to work. >> nevertheless as shown by indicators like the rate of unemployment and ratio of employment to population, we still have a long way to go before the labor market can be said to be operating normally. >> you say you stay away from the politics. with no politicians in the room, there was a hint in a number of things ben bernanke said that in fact politics and policy are getting intertwined. politics is messing up the ability for good sound policy to fix the economy. will said. >> it gets back to something will said. the certainty issue. when i talk to audiences, i say i don't care who you vote for, vote, republican or democrat, vote for someone whose going to be willing -- i always thought a good politician is someone that wouldn't be my best friend because they'd be willing to compromise their own personal ideologies for the good of a whole to come to a deliberate decision. >> it wouldn't be partisan to say that that seems to have gone out the window. >> on both sides. >> on both sides. >> and that's the problem. we need to vote for people who are willing to make decisions for the certainty going forward on the tax code. i think some major reforms need to be made in the tax code that could eventually be more pro growth. >> totally agree on that. >> long-term changes to entitlements that still protect enough people but people like me, i don't need a lot of those entitlements and i'm fine without them. so there needs to be some major changes. some of them tweaking, some of them major changes, and they can be made over a period of time. make the decisions now. why do we want to wait until we're in europe's situation where we're forced to make changes by financial markets that are draconian. and horrific. >> being forced into a corner doesn't help you make changes faster. will, is there any chance, politically speaking, because you are a political commentator. >> with a philosophical perspective. >> to richard's left. is there any way that any of the parties at this point can decide they're going to take this sensible approach, because that's the approach that would really help, wouldn't it? if diane were running, i would vote for her. >> the answer to the question is no. by the way, neither party has t the monopoly on the things that are needed. >> but if you go with diane's idea that you elect people who are not so attached to their ideology that the other party has the better idea, you can support that. you and i aren't old enough to have forgotten that. >> but let's not all dump on ideology. ideology gives you long-term perspective and allows you to think about where this should be in 10 to 20 years. i think we're in emergency circumstances right now. we're doing things that we think shouldn't be done for the long term. that's why i'm very honest about my political perspective. i think conservatives have a longer term vision that's better. >> tax reform -- they don't have infrastructure, democrats are better at that, but these are the ideas i think we should be talking about. >> you always have a welcome place to talk about them on this show. we enjoy having you on here. diane, what a pleasure to see you here. >> thank you. >> richard, you're not only welcome, you can't leave. we need you back after the break, so to you, stay there. the middle class, we've discussed this, the middle class in this country is in trouble. what some solutions the middle class can count on now and in the future. that's next on "your money." 's it's no secret the middle class in this country is struggling. in morris county, new jersey, one of the nation's wealthiest counties, one family of five went from making six figures to living together in one small room in someone else's house. cnn money's poppy harlow has the story. >> reporter: one room now home to a family of five. >> the two girls sleep on the bottom. and then our oldest sleeps on the top. >> reporter: mom and dad somehow manage to sleep together on the couch. >> most of the time honestly i lay on top of him. >> reporter: if you think you know what long-term unemployment can look like, think again. >> you can't understand something until you've lived it. >> reporter: adam and talia brought in more than $100,000 just two years ago, by all measures middle class, until they were both laid off. frightening new numbers show 50% of the unemployed in new jersey have been out of work for more than six months, and it's a similar story elsewhere. >> i was a lead technician for comcast. >> you had it made? >> yeah, i had it made. >> i was customer service rep. >> reporter: what's the hardest element of this situation that you think people might not know? >> it's definitely not financial. it's emotional. if you're not strong people, it could break you. >> reporter: their unemployment checks have run out and they have exhausted their savings. >> the only benefits we get from the state right now is assistance with the food. >> reporter: human services of morris county, new jersey, where they live has seen their food stamp caseload surge 140% since 2007. >> seeing dull -- dualy unemployed family is unusual for us. >> reporter: so the bottom is falling out of the middle class. >> i believe that. >> reporter: have you seen something like this before? >> no, not like this, never. and i've been here since 1980. >> reporter: this is one of the wealthiest counties in america, where the median household brings in over $91,000 a year. but when you can't find a job here, you can't get by. >> you send out a lot of resumes and pray to god someone gets back to you. >> reporter: 500 resumes later, nobody has offered her a job. >> how long do you think you can go on like this? >> honestly not very much longer. >> what's up with you? >> reporter: afternoons are spent at grandma's with their three kids. then it's back to laura sullivan's house where they're living rent-free. she took them in after knowing the mobleys less than a year. >> people ask why would you take someone in and you have no privacy. i'm like honestly, you want to compare my privacy to a family not having a home? like is there any comparison? >> reporter: it's far from ideal, but when you've been out of work this long, there's no room for ideal. and ali, just to let you know, just the kicker in all of this, the wife there, talia, she went back to school after she lost her job. she retrained as a certified medical assistant because she heard, like we all do, that the jobs are in health care. she still hasn't gotten a job. she did have a second round interview, waiting to hear back on that one. her husband, in the meantime, started his own t-shirt company with his brother trying to do something, but no funding to get it off the ground. >> good point. right. so they have hit on two other problems, retraining into health care is useful, but the jobs aren't evenly distributed around the country. and starting a business, this may be one of the best times to start a business, but the availability of funding or credit is a problem. this sounds like an extreme situation. how common do you think this is? >> reporter: well, talia said to me, we're not the only ones going through this. a lot of my friends are going through this situation. it doesn't give me comfort, just makes me more worried. if you dig into the numbers, even in the very good jobs