Commentary Magazine


Topic: recession

The Jobs Report

It’s another dreary jobs report out this morning from the Bureau of Labor Statistics, detailing yet another month of the apparently endless “Obama Recovery,” the worst since the Great Depression lingered on and on in the 1930s.

Employment rose by 155,000 and the unemployment rate stayed the same at 7.8 percent (the November unemployment rate, originally reported at 7.7 percent, was revised upwards a notch in this report). It’s not surprising that it stayed the same, as the civilian workforce rose by 192,000 last month. In other words, job growth is barely keeping pace with population growth. And part of the job growth is probably due to Hurricane Sandy, as 30,000 construction jobs were added in December, not ordinarily a good month for construction jobs.

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It’s another dreary jobs report out this morning from the Bureau of Labor Statistics, detailing yet another month of the apparently endless “Obama Recovery,” the worst since the Great Depression lingered on and on in the 1930s.

Employment rose by 155,000 and the unemployment rate stayed the same at 7.8 percent (the November unemployment rate, originally reported at 7.7 percent, was revised upwards a notch in this report). It’s not surprising that it stayed the same, as the civilian workforce rose by 192,000 last month. In other words, job growth is barely keeping pace with population growth. And part of the job growth is probably due to Hurricane Sandy, as 30,000 construction jobs were added in December, not ordinarily a good month for construction jobs.

Unemployment for blacks (14.0 percent) and teenagers (23.5 percent) remained dismal, as did unemployment for those aged 18-29 at 11.5 percent. Long-term unemployment is stuck at 4.8 million, or 39.1 percent of all unemployed, and 7.9 million are working part-time although they would rather work full-time. The number of employed people as a percentage of the total population remains at 58.6, the same as it was a year ago. That is not exactly a sign of a recovery that is gathering steam.

Why is the dismal Obama recovery so much like the dismal Roosevelt recovery of the 1930s? Could it be because both presidents pursued the same policies—high taxes on high-income earners, greatly increased regulation on business, government “investment,” and redistribution of wealth? Yep, it could be.

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No Wonder Obama Can’t Move the Needle

John Podhoretz on Fox and Friends this morning noted that the Obama campaign has spent $120 million since June trying to tear down Mitt Romney. But in June, the Real Clear Politics average of polls had Obama ahead by two points and this morning he is ahead by less than 1 percent, not much of a return on his investment.

One reason for his failure to demonize Romney and pull away from him in the polls might be found here (h/t Instapundit). Since the so-called recovery began in June 2009, the median household income has fallen by 4.8 percent. That’s more than it fell during the recession (2.6 percent).

Real median annual household income fell to $53,508 from $54,916 during the 18-month recession from December 2007 to June 2009, according to the firm’s study of income data for the 36-month period ended in June 2012. Incomes kept falling during the 36-month period since then, dropping to $50,964 in June 2012.

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John Podhoretz on Fox and Friends this morning noted that the Obama campaign has spent $120 million since June trying to tear down Mitt Romney. But in June, the Real Clear Politics average of polls had Obama ahead by two points and this morning he is ahead by less than 1 percent, not much of a return on his investment.

One reason for his failure to demonize Romney and pull away from him in the polls might be found here (h/t Instapundit). Since the so-called recovery began in June 2009, the median household income has fallen by 4.8 percent. That’s more than it fell during the recession (2.6 percent).

Real median annual household income fell to $53,508 from $54,916 during the 18-month recession from December 2007 to June 2009, according to the firm’s study of income data for the 36-month period ended in June 2012. Incomes kept falling during the 36-month period since then, dropping to $50,964 in June 2012.

As Gordon Green of Sentier Research, who did the number crunching based on U.S. Census data, put it: “Almost every group is worse off than it was three years ago, and some groups had very large declines in income. We’re in an unprecedented period of economic stagnation.”

It’s tough to get people to vote for a president whose economic policies have produced only “an unprecedented period of economic stagnation.”

 

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Obama Makes it Too Easy on His Critics

In a recent interview with Rolling Stone magazine, the president was asked about the tone and tenor of the debate that’s going to take place during the campaign. Obama answered, in part, this way:

[The GOP’s] vision is that if there’s a sliver of folks doing well at the top who are unencumbered by any regulatory restraints whatsoever, that the nation will grow and prosperity will trickle down. The challenge that they’re going to have is: We tried it. From 2000 to 2008, that was the agenda. It wasn’t like we have to engage in some theoretical debate – we’ve got evidence of how it worked out. It did not work out well, and I think the American people understand that. Now, the burden on me is going to be to describe for the American people how the progress we’ve made over the past three years, if sustained, will actually lead to the kind of economic security that they’re looking for. There’s understandable skepticism, because things are still tough out there… The fact of the matter is that times are still tough for too many people, and the recovery is still not as robust as we’d like, and that’s what will make it a close election. It’s not because the other side has a particularly persuasive theory in terms of how they’re going to move this country forward.

So Obama wants a debate based not on theoretical claims but on empirical achievements.

Wonderful. Why don’t we accommodate the president?

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In a recent interview with Rolling Stone magazine, the president was asked about the tone and tenor of the debate that’s going to take place during the campaign. Obama answered, in part, this way:

[The GOP’s] vision is that if there’s a sliver of folks doing well at the top who are unencumbered by any regulatory restraints whatsoever, that the nation will grow and prosperity will trickle down. The challenge that they’re going to have is: We tried it. From 2000 to 2008, that was the agenda. It wasn’t like we have to engage in some theoretical debate – we’ve got evidence of how it worked out. It did not work out well, and I think the American people understand that. Now, the burden on me is going to be to describe for the American people how the progress we’ve made over the past three years, if sustained, will actually lead to the kind of economic security that they’re looking for. There’s understandable skepticism, because things are still tough out there… The fact of the matter is that times are still tough for too many people, and the recovery is still not as robust as we’d like, and that’s what will make it a close election. It’s not because the other side has a particularly persuasive theory in terms of how they’re going to move this country forward.

So Obama wants a debate based not on theoretical claims but on empirical achievements.

Wonderful. Why don’t we accommodate the president?

Annual economic growth was three times higher under President Bush than under President Obama. Under Bush, the unemployment rate averaged 5.3 percent; under Obama, it has never been under 8 percent. In the wake of a recession that began roughly seven weeks after President Bush took office, America experienced six years of uninterrupted economic growth and a record 52 straight months of job creation that produced more than 8 million new jobs. We saw labor-productivity gains that averaged 2.5 percent annually — a rate that exceeds the averages of the 1970s, 1980s, and 1990s. Real after-tax income per capita increased by more than 11 percent. And from 2000 to 2007, real GDP grew by more than 17 percent, a gain of nearly $2.1 trillion. As for the deficit, it fell to 1 percent of GDP ($162 billion) by 2007. Indeed, before the financial crisis of 2008 – which I’ll return to in a moment — Bush’s budget deficits were 0.6 percentage points below the historical average.

As for the Obama record, as I point out in this essay in the current issue of COMMENTARY, President Obama has overseen the weakest recovery on record. He is on track to have the worst jobs record of any president in the modern era. The standard of living for Americans has fallen more dramatically during his presidency than during any since the government began recording it five decades ago. Unemployment has been above 8 percent for 40 consecutive months, the longest such stretch since the Great Depression. Home values are nearly 35 percent lower than they were five years ago. The United States has amassed more than $5 trillion in debt since January 2009, with the president having submitted four budgets with trillion-dollar-plus deficits. Prior to Obama, no president had submitted even a single budget with deficits in excess of a trillion dollars. In addition, government dependency, defined as the percentage of persons receiving one or more federal benefit payments, is the highest in American history. And a record 46 million Americans are now living in poverty.

On Obama’s record, then, it’s not like we have to engage in some theoretical debate. We’ve got evidence of how it worked out. It did not work out well, and I think the American people understand that.

Now unlike Obama, some of us are willing to concede that things need to be placed within a proper context. Obama took the oath of office in the wake of a financial collapse that made every economic indicator much worse; it’s only fair to take that into account. But even here, in characterizing what happened, Obama insists on presenting a distorted picture of reality, pretending that it was wholly the fault of his predecessor and the GOP. In fact, it was a complex set of factors that involved everything from credit default swaps to the Federal Reserve to policies in which both parties were complicit. But this much we know: Democrats bear the majority of the blame for blocking reforms that could have mitigated the effects of the housing crisis, which in turn led to the broader financial crisis.

As Stuart Taylor put it in 2008:

The pretense of many Democrats that this crisis is altogether a Republican creation is simplistic and dangerous. It is simplistic because Democrats have been a big part of the problem, in part by supporting governmental distortions of the marketplace through mortgage giants Fannie Mae and Freddie Mac, whose reckless lending practices necessitated a $200 billion government rescue [in September 2008]. … Fannie and Freddie appear to have played a major role in causing the current crisis, in part because their quasi-governmental status violated basic principles of a healthy free enterprise system by allowing them to privatize profit while socializing risk.

The Bush administration warned as early as April 2001 that Fannie and Freddie were too large and overleveraged and that their failure “could cause strong repercussions in financial markets, affecting federally insured entities and economic activity” well beyond housing. Bush’s plan would have subjected Fannie and Freddie to the kinds of federal regulation that banks, credit unions, and savings and loans have to comply with. In addition, Republican Richard Shelby, then chairman of the Senate Banking Committee, pushed for comprehensive GSE (government-sponsored enterprises) reform in 2005. And who blocked these efforts at reforming Fannie and Freddie? Democrats such as Christopher Dodd and Representative Barney Frank, along with the then-junior senator from Illinois, Barack Obama, who backed Dodd’s threat of a filibuster (Obama was the third-largest recipient of campaign gifts from Fannie and Freddie employees in 2004).

So Obama and his party bear a substantial (though not exclusive) responsibility in creating the economic crisis that Obama himself inherited. And even if you set all this aside, Obama entered office knowing what he faced, including a deficit and debt that was exploding. And rather than promote policies that accelerated economic growth and began to address our fiscal entitlement crisis, Obama went in exactly the opposite direction.

One other observation: historically, the worse the recession, the stronger the recovery (it’s referred to as the “rubber band effect.”) What is noteworthy about Obama’s economic record is how, in an environment in which one would expect the recovery to be unusually strong, it has been historically anemic. It seems to me, then, that “the other side” has quite a persuasive theory when it comes to moving the nation forward, at least compared to the theory being advanced by the current occupant in the White House.

Sometimes it seems as if Barack Obama is making it too easy on his critics.

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The Damaging Effects of Obamanomics

According to a recent Washington Post story,

The proportion of Americans in their prime working years who have jobs is smaller than it has been at any time in the 23 years before the recession, according to federal statistics, reflecting the profound and lasting effects that the downturn has had on the nation’s economic prospects.

By this measure, the jobs situation has improved little in recent years. The percentage of workers between the ages of 25 and 54 who have jobs now stands at 75.7 percent, just a percentage point over what it was at the downturn’s worst, according to federal statistics.

Before the recession the proportion hovered at 80 percent.

While the unemployment rate may be the most closely watched gauge of the economy in the presidential campaign, this measure of prime-age workers captures more of the ongoing turbulence in the job market. It reflects “missing workers” who have stopped looking for work and aren’t included in the unemployment rate.

During their prime years, Americans are supposed to be building careers and wealth to prepare for their retirement. Instead, as the indicator reveals, huge numbers are on the sidelines.

“What it shows is that we are still near the bottom of a very big hole that opened in the recession,” said Heidi Shierholz, an economist at the Economic Policy Institute, a left-leaning think tank.

The Post story goes on to point out that the percentage of prime-age men who are working is smaller now than it has been in any time before the recession, going all the way back to 1948, while the proportion of prime-age women is at a low not seen since 1988. A 50-year-old heating and AC technician from Alexandria, Virginia, was out of work in 2009 but found a job right away. He was laid off again about six months ago and, standing outside the Alexandria unemployment office, said it seems harder this time around.

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According to a recent Washington Post story,

The proportion of Americans in their prime working years who have jobs is smaller than it has been at any time in the 23 years before the recession, according to federal statistics, reflecting the profound and lasting effects that the downturn has had on the nation’s economic prospects.

By this measure, the jobs situation has improved little in recent years. The percentage of workers between the ages of 25 and 54 who have jobs now stands at 75.7 percent, just a percentage point over what it was at the downturn’s worst, according to federal statistics.

Before the recession the proportion hovered at 80 percent.

While the unemployment rate may be the most closely watched gauge of the economy in the presidential campaign, this measure of prime-age workers captures more of the ongoing turbulence in the job market. It reflects “missing workers” who have stopped looking for work and aren’t included in the unemployment rate.

During their prime years, Americans are supposed to be building careers and wealth to prepare for their retirement. Instead, as the indicator reveals, huge numbers are on the sidelines.

“What it shows is that we are still near the bottom of a very big hole that opened in the recession,” said Heidi Shierholz, an economist at the Economic Policy Institute, a left-leaning think tank.

The Post story goes on to point out that the percentage of prime-age men who are working is smaller now than it has been in any time before the recession, going all the way back to 1948, while the proportion of prime-age women is at a low not seen since 1988. A 50-year-old heating and AC technician from Alexandria, Virginia, was out of work in 2009 but found a job right away. He was laid off again about six months ago and, standing outside the Alexandria unemployment office, said it seems harder this time around.

“The economy is just really messed up right now,” he said.

Indeed it is.

Yesterday, we also learned that Americans’ confidence in the economy suffered the biggest drop in eight months. The Conference Board said that its Consumer Confidence Index now stands at 64.9, down from 68.7 in April. “Consumers were less positive about current business and labor market conditions, and they were more pessimistic about the short-term outlook,” said Lynn Franco, director of economic indicators at The Conference Board.

These are more signs (as if we needed them) that the economic recovery under Obama is historically weak. With a little more than five months left in the election, there’s nothing the president seems able to do about it. And the human suffering caused by his misguided policies continues to mount.

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