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2014: The Collapsing Obamaconomy

Come the new year, the U.S. insurance industry, consumer spending, and the labor force might be retracting all at once.

by
Stephen Green

Bio

November 10, 2013 - 11:36 pm

obama_january_2014_calendar_11-10-13-2

The good news is the U.S. economy wheezed out 204,000 new jobs in October, despite all the sound and fury (signifying very little) over the 17%, 16-day-long government semi-demi-shutdown. The bad news is pretty much everything else, so let’s take a look at what lies underneath the big headline number.

CNBC put a happy face on the latest jobs report with the headline, “Shutdown slowdown? Job creation soars in October.” It’s true that 204,000 is a bit higher than the recent average of 190,000, but the story’s very first paragraph belies the word “soars.” Read:

There were a net 204,000 new jobs created for the month, though the unemployment rate rose to 7.3 percent and households reported a huge drop in employment, the Bureau of Labor Statistics said. A separate measure that includes the underemployed and those who have quit looking also moved higher, from 13.6 percent to 13.8 percent.

The story goes on to quote Moody’s Mark Zandi who called the jobs report “bizarre,” and said that he “wouldn’t be surprised if this gets revised to some degree…down.” So much for the downward revision to come “unexpectedly,” which is the word Reuters uses to describe the recent drop in U.S. consumer confidence:

The Thomson Reuters/University of Michigan’s preliminary reading on the overall index of consumer sentiment fell to 72.0 in November, its lowest since December 2011. That was lower than both October’s final reading of 73.2 and the 74.5 economists had expected this month.

Lower-income households in particular worried about their future financial state.

Lower-income households are right to be worried, in particular and in general — because their prospects aren’t looking so good. Consumer spending slowed last month on a “deceptively weak” GDP report. A big chunk of last quarter’s GDP growth was business inventories increasing on weak demand, and weak imports — another sign of weakening demand — also made growth appear bigger than it actually was.

The reason can best be summed up by Matt Nesto’s jobs story for Yahoo Finance:

“It’s a weird report” says Zachary Karabell, the head of global strategy at Envestnet and founder of River Twice Research in the attached video. “It’s people tending bar. It’s lower wage retail jobs. It’s lower wage health services jobs” that the economy is creating, and “a lot of these are not particularly well paid and they don’t have a great future.”

And that’s a problem. Not only for the 14-million American who are still out of work and looking to get hired, but more broadly, it undercuts the entire economy.

“If you’re earning $18,000 a year as a bartender, that’s not going to translate into massive consumer spending,” Karabell says.

How does that bartender compare with a bartender from last year? He’s not really doing any better at all. BLS reports that wages were 1.7% higher than last year, but that prices rose 1.6% during that same timeframe. That raise of one-tenth of one percent isn’t likely to result in a robust Christmas shopping season.

Of course, that $18k bartender might be feeling pretty lucky compared to the nearly three quarters of a million Americans who simply gave up and left the labor force — just in October. Breitbart.com’s Mike Flynn writes that “this exodus pushed the labor force participation rate down to 62.8%, the lowest level since 1978.” Flynn adds that the number of Americans with jobs actually fell by 735,000 despite the creation of those 204,000 new jobs.

The real fun might begin next month, when Healthcare.gov is supposed to be up and running, and ready to deal with the expected rush of millions seeking new insurance policies before the New Year. Let’s assume that the site is functioning well enough, even if only barely, and that the state exchanges are up and running, too. Millions are going to find themselves facing the twin devils of higher premiums and higher deductibles. That means they’ll take home less pay, and have to sock away more money into savings. The resulting reduction in consumer spending — 70% of the U.S. economy — could be a body blow to our already weak growth.

Or suppose the rush never materializes, since only 22% of the uninsured actually plan on buying ObamaCare policies. That’s the “death spiral” insurers fear, when rising prices force out the young and healthy, leaving them with nobody but the old and sick. At the start of the new year, our economy might just be looking at a collapsing insurance industry, declining consumer spending, rising underemployment, and a shrinking labor force — all at once.

So if you’re lucky enough to be one of the employed and insured and the healthy, be sure to give your bartender a bigger tip. And tell him to make it a double.

(Artwork based on a modified Shutterstock.com image.)

Stephen Green began blogging at VodkaPundit.com in early 2002, and has served as PJMedia's Denver editor since 2008. He's one of the hosts on PJTV, and one-third of PJTV's Trifecta team with Scott Ott and Bill Whittle. Steve lives with his wife and sons in the hills and woods of Monument, Colorado, where he enjoys the occasional lovely adult beverage.

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Top Rated Comments   
The resulting reduction in consumer spending — 70% of the U.S. economy — could be a body blow to our already weak growth.

For every poor person who will gain by ObamaCare, there are several who'll pay hundreds more each month for worse healthcare. The project has always been about concentration of power into the hands of the elites running the country from Washington, albeit it cheered on by the Professoriat in the Faculty Lounge and of course the media.

First it was the uninsured, now we find that it was also the insured, whose insurance didn't meet the standards of our well intentioned socialist leaders. Wait until we're all on Medicaid, then we'll see about standards.

ObamaCare is an unmitigated disaster on so many fronts, it was a preposterous scheme from the beginning. The weight of the monstrosity could throw the nation into a deeper and longer lasting recession than 2008.
40 weeks ago
40 weeks ago Link To Comment
The US has a resilient history. The demographics and education levels have changed, the former bringing in many, including illegals, that lack the values that provoked the resilience. The latter, the educational brainwashing, removes the ability to think critically from many of the native-born, including people well into middle-age. The public has agreed to the Reid-Pelosi-Obama-con in exchange for 'security' which may prove a near-complete illusion if the economy tanks and the markets collapse. The genius of Americans in the past was the self-reliance that brought people through the hard times, and then propelled then forwards when things improved. I don't see that dynamic existing in critical mass any longer..
40 weeks ago
40 weeks ago Link To Comment
What's amazing is that the economy hasn't totally collapsed yet. There's no gas in the tank and the vehicle is coasting on residual momentum. When the fed props up the stock market by printing and giving it a $Trillion dollars per year in printed money with no backing and the government spends another $Trillion per year above what it takes in then doubles down by raising taxes and triples down by increasing regulatory and reporting burdens on business, it's a wonder there is any free market at all. The rich will weather the storm because they have the means to convert their paper money to tangible assets that survive inflation, but for the middle class and poor what we are witnessing is the largest government sanctioned theft of all of our assets and money in the history of the world by the con artists, consummate liars and criminals all, whom we elected as our politicians. And for those who say politicians with principles need to compromise, how does one compromise with the criminal who comes in the night to steal all you have, to rape your wife and children, then murder you and your family? How do you compromise with a Dem run Senate that refuses to pass a budget contrary to law for over 5 years, that says "no compromise" on debt limit or taxes or Obamacare, or a President that says "no compromise" with Republicans on anything, issues Executive Orders when he can't get Congressional Approval and commits perjury routinely in Congressional testimony and in public statements, and routinely violates law and regulation to enrich friends and punish adversaries? And all of it without consequences since he owns the US Attorney and all law enforcement at the federal level. And Reid, the Senate Majority Leader like the tyrant he is, totally controls the entire Senate agenda and will never allow the President to be removed from office for his blatant crimes. I just hope America is resilient enough to survive this disastrous Presidency and can restore respect for constitutional law, property and civil rights.
40 weeks ago
40 weeks ago Link To Comment
All Comments   (49)
All Comments   (49)
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Why are the 5%( but really lots MORE) who are losing their policies 'INSIGNIFICANT' to the DemocRATS while the 1.4% HOMOSEXUALS and 2% feral Black 'Youths' (think OBOZOS son Trayvon Martin) so important they must be protected at all costs but if you dont or if you criticize them you are a RACIST and a HOMOPHOBE
39 weeks ago
39 weeks ago Link To Comment
If the US economy 'IMPROVES' any more under OBOZO America will be bankrupt.
39 weeks ago
39 weeks ago Link To Comment
There are so many making so much noise about the criminally incompetent mechanics of the roll out of obamafraud that the actual problem is being shunted aside. The problem is NOT the roll out, rather, it is the thing itself. It is almost inconceivable that so many could be so stupid as to believe the con that the democrats perpetrated. Imagine someone telling you that you can buy more food for less money and the food will be a better quality. Additionally, all of your friends and neighbors, regardless of their incomes, will get the same deal. Most people would reject this non-sense out of hand. So, why have they fallen for it in this instance?
40 weeks ago
40 weeks ago Link To Comment
“It’s people tending bar. It’s lower wage retail jobs. It’s lower wage health services jobs...”

Well, when our rulers allow all the factories to migrate to China, Indonesia, Mexico, and Timbuktu, what's left? Jobs that CAN'T migrate.

With 6,000,000 jobs and 55,000 factories sent abroad, we have about half a functioning economy. We produce less and less, we consume more and more, and we borrow to cover the difference.

But all the brainiacs and pundits say, "Tra-la-la, we don't care, it's all good, it's free trade, those jobs aren't coming back" Well, if those well-paying, middle-class factory jobs don't come back, our economy won't come back.
.
40 weeks ago
40 weeks ago Link To Comment
Add this - right now, most of the Obamacare disaster stories have to do with individuals needing to buy policies, previously 5% and with all the discontinuances it's still probably under 10%. Maybe 10% will never buy. But that means 80% may be hit by Obamacare and The Return Of The Employer Mandate when? Just in time for the 2014 elections. Rah!
40 weeks ago
40 weeks ago Link To Comment
Interesting that we are talking percentages now instead of millions. Remember when we were trying to help the 15-20-25...50 million (just make up a scary number... and does that include illegals too?) that "couldn't" get insurance? But now, oh well, only 5% lose their insurance...uh, 5%=15 million people. So 15 million lose so 15 million can gain. So fair.
40 weeks ago
40 weeks ago Link To Comment
So the economy is collapsing under Obama, startling news. But pray tell, when has there ever been any period under Obama when the economy was ever good.
40 weeks ago
40 weeks ago Link To Comment
October is usually a good month for the total number of people actually employed. September has been, except for a few times since the early 1950s, a bad month. So, typically, there's a drop in total employed in September, then a rise in October - though usually not as many get added in October as were lost in September. The last time fewer people were employed in October than in September? 1982. Yeah, 30 years ago. Having half a million fewer people employed in October than in September is not good at all.

I'm not enough of a BLS watcher to know if that number includes Federal employees or not. They do surveys to make educated guesses about the employment numbers and they also count "any" employment as being employed, so, it's always hard for me to figure out. (Just as the highly unusual numbers right prior to the 2012 elections - both months showing 700k more jobs and.... Obama got reelected.)
40 weeks ago
40 weeks ago Link To Comment
204,000 newly created jobs does sound good until you realize that many
or most of those jobs are temporary as businesses prepare for the
holiday season. And of course the real, true unemployment rate is
more than 13%, so who does the government think it is fooling?
Good luck, America.
40 weeks ago
40 weeks ago Link To Comment
I seem to recall reading a day or two prior to these numbers being released another number, sorta hidden in the back pages and small type along the lines of 700K more drop out of employment market.
40 weeks ago
40 weeks ago Link To Comment
204,000 new jobs sounds good until you realize that despite 204,000 new jobs, somehow, 507,000 fewer people were working in October than September. It's been over 30 years since October has had a lower employment number than September.
40 weeks ago
40 weeks ago Link To Comment
Obama been very very good to his sons, who be drivin' Escalades bought with no money down through downtown Philly, Newark, Bal'more and other assorted shitholes. Good times!
40 weeks ago
40 weeks ago Link To Comment
A communist regime eats out its host.
40 weeks ago
40 weeks ago Link To Comment
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