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Reality Once Again Unmasks the Obama Spin

The big economic news of the day:

The U.S. economy shed 345,000 jobs in May, pushing the unemployment rate near double-digits and bringing the total number of jobs lost in the current recession to 6 million.

But the employment figures, which the Labor Department reported this morning, offer hope that the worst of the economic downturn could be over: The number of lost jobs was the lowest since September, and it was only half of the average monthly job losses in the last half-year.

The Bureau of Labor Statistics reported that the nationwide unemployment rate now stands at 9.4 percent, the worst it has been in more than 25 years. If workers abandoned their job searches or settled for part-time employment were factored in, the rate would have been 16.4 percent.

[. . .]

“This is President Obama’s economy now,” Rep. Eric Cantor (R-Va.), the House Republican Whip, said in a statement. Later, he added: “As job losses continue to mount, families’ worries about losing their healthcare, paying their mortgage, and sending their children to college continues to intensify.”

Funny how the media spots Republican “pouncing” while Democrats generally “responded” during the Bush years. But it is hard to escape three central points. First, the Stimulus Plan is a bust and only the most committed spinners can, with a straight face, contend that it is saving any jobs. Second, given the “bold” (conservatives would say “radical” or “reckless”) spending and regulatory efforts undertaken by Obama it will be hard for him to lay blame elsewhere, particularly if things don’t turn around within a short time. Third, it is going to get worse for a while, although the rate of worsening may slow. And that can fairly be attributable to the type and timing of the stimulus. Keith Hennessey writes:

Remember that employment is typically a lagging indicator, so the employment picture will still look bad even after the economy has begun to recover. Much of the commentary focuses on the second derivative — things are getting bad, but the badness isn’t getting worse. Since commentary and news cycles rely on new information, it is easy to lose sight of the reality that our economy continues to shrink and lose jobs.

[. . .]

In addition to being inefficient and wasteful, the stimulus was poorly timed. By deferring to congressional desires to shovel taxpayer funds to slow-spending infrastructure projects, the administration got a stimulus law that isn’t helping GDP growth now, and won’t have a quantitatively significant effect until 2010. The administration is in a tough spot — if the economy is not healing, then at some point the president will take the blame. If instead the economy is healing before the stimulus takes effect, then maybe the stimulus was unnecessary or even counterproductive.

The president has remarked that his presidency will turn on economic recovery. He is largely correct. Perhaps he should have taken some of those Republican suggestions — they might have worked or at least given him political cover.


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