Celebrating and Capitalizing on Our Misery
The economy, as measured by growth in the nation’s gross domestic product (GDP), finally grew again in the third quarter. That bit of decent news only papers over an otherwise dreadful situation.
Of course, compared to the alternative, the positive GDP report is welcome. Barring drastic subsequent downward adjustments, it brings an end to the recession as normal people define it. Whether it concludes the recession as determined by the National Bureau of Economic Research (NBER), which was inexplicably allowed to hijack the dictionary and substitute their arbitrary judgment as to what an “official” recession is decades ago, is anyone’s guess.
NBER’s alleged experts “determined” that the current recession really began in December 2007, during a quarter when the economy grew at an annualized 2.7%. The NBER-defined recession somehow continued during the second quarter of 2008 while GDP was growing at an annualized 1.5%. If the group ultimately declares that the recession ended during the past quarter, it will be the first time it has done so while the economy was shedding so many seasonally adjusted jobs (768,000, or almost 0.6% of the workforce, pending possible adjustments).
While GDP is up, many economic metrics that matter more to the average person are down, so much so that it’s probably fair to say that the economy as most Americans experience it is still shrinking. This explains why, despite the “it’s not that bad” hymn the choir known as the nation’s establishment press continues to sing, the Conference Board’s consumer confidence index fell sharply in October and is below where it was in September 2008.
The most obvious problems are soaring unemployment and growing underemployment.
The seasonally adjusted unemployment rate in September was 9.8%. Even that horrid figure, which Christina Romer of President Obama’s Council of Economic Advisers expects not to change much between now and the end of 2010, masks how bad things really are. That’s because many potential workers are dropping out.
If you compare the sum of the civilian labor forces of all 50 states and the District of Columbia at this Bureau of Labor Statistics table as of September 2009 to a year earlier (separately calculated here), you’ll find that the workforce shrunk by almost 600,000. Take out Texas and the shrinkage is almost 900,000. Perform the same operation on this seasonally adjusted table (again shown here), this time comparing September 2009 to July, and you’ll see a decline of 351,000 in just two months (almost 400,000 if you again take out Texas). Meanwhile, during the past year the nation’s 16-and-over population has increased by almost two million. It’s clear that a lot of people who would prefer to be working have taken themselves out of the job market, thus disappearing entirely from the government’s jobs analyses.
This trend has already twisted the impact of official state and local employment reports. In Ohio, for example, the seasonally adjusted unemployment rate dropped from 10.8% to 10.1% in September. Big deal; the change occurred not because more people found work, but because more people dropped out.
Beyond that, those who are still working are on average working less and taking home less. The average work week, at 33 hours, is at a record low. The government’s September index of real average weekly earnings was down 1.9% from December.
One quarter of positive GDP growth hardly makes up for all of this. That there is a palpable sense of misery permeating this economy — and that it is not dissipating — is undeniable.
Now that this malaise has arrived and appears likely to remain in place for a while, many members of the Democratic Party are glad it’s here. That’s because they believe that the currently awful economy will help them pass government-controlled health care and other elements of their statist agenda.
I’m not saying it; they are, up to and including the president himself:
The bad economy is good for President Obama and Democrats as they try to reinvent the health care system with scant Republican support.
… Congressional Democrats … say that economic insecurity and high unemployment stoke public support for their proposals to guarantee insurance for millions of Americans. …
[Washington Congressman James McDermott said that] “in 1993, we were talking about the uninsured as ‘them.’ Now it turns out this is for us. When a bank like Washington Mutual in Seattle lays off 3,000 people, they lose health insurance. Millions of people with insurance are asking, ‘What if I lose my job?’”
Mr. Obama is doing everything he can to highlight this sense of insecurity as he tries to persuade people with insurance that his proposals would help them. Worries about insurance are “keeping more and more Americans awake at night,” he said last month.
The fate of health legislation may hinge on whether those anxieties trump concerns about the effects of the Democratic proposals.
Massachusetts Congressman Barney Frank, sensing a historic control-enhancing opportunity, is doing his part to capitalize on the widespread economic stress. Recently on MSNBC, the Frank said that in regards to the nation’s financial system, “we are trying on every front to increase the role of government in the regulatory area.” This comes from a guy who for the past year has stood idly by while the Federal Housing Administration has proactively (I would argue deliberately) repeated the mistakes that sent Fannie Mae and Freddie Mac over the cliff to the tune of what will ultimately be hundreds of billions of bailout dollars.
Thus, the very people who over a year ago brought about what I have since July 2008 been calling the POR (Pelosi-Obama-Reid) economy now want to capitalize on it to enact their power-hungry, commerce-crippling agenda.
Beltway Democrats’ detestable, ghoulishly opportunistic, and barely disguised euphoria over how bad it is for so many of us is enough to make you wonder if they set out to create this mess in the first place. The way they are now attempting to take advantage of it lends strong credence to that belief, almost to the point where you don’t really need to wonder any more. After all, if taking down the economy wasn’t their original goal, you would expect that they’d be reacting very differently now — and they’re not. Our national nightmare is Rahm Emanuel’s and his party’s dream come true.
Isn’t that entirely in character for Democrats? Misery is their bread and butter. (“The worst thing you can do to the liberals is take away their grievances.” — Bill Moyers)
Most of us stopped wondering long ago. Nor is the end in view all that obscure.
Sure, there’s jobs ‘created’ or ‘saved’. Fed jobs. What we need more of.. bureaucracy in every facet.
Barney ‘I make Elton John look tough’ Frank’s “We are trying on every front to increase the role of Government in the regulatory area” is occurring. The man should be arrested for going against the laws of the B of R and our Constitution.
Bad economy gives Democrats more control, more reason to spread the wealth. The psychology of a bad economy makes people more willing to blindly follow.
The health-care bill is out !
Severe cuts to Medicare (this will help the budget of the Social Security, by causing the early death of some millions elderly),
high taxes,
government option.
The way toward the end of American strength is now wide open.
Another effort, Comrades, and ALL the goals of Osama Bin laden will be realized !
The only thing that shocks me is the fixed smile on the face of Pelosi.
Impressive.
They know what they are doing.
Thank you for the opportunity to comment.
A lesson in math:
Regarding the breathless, glorious GDP announcement from the new “Julius Caesar” our most revered leader –
If you are 10 feet under water and then you rise to 4 feet under water, you have gotten closer to the surface but you are still under water, and will drown.
We are still under water. Just not so much. Bring out the party hats!
Kathy: I think you are wrong about this bad economy making more people willing to follow the bad lead of the Democrats. The followers will follow because that is what they do. Mostly the followers don’t vote and should it come to a second American revolution, they will mostly try to hide. Not so different from the first American revolution. People of reasonable intelligence are becoming more willing to revolt, especially at the ballot box. The problem is finding candidates worth voting FOR. So far the Repubs have shown no interest in finding viable candidates. Sure hope that changes before 2010. Don’t like the alternative.
The Democraft/leftist economy: It doesn’t suck very much! (Gee, thank you, libtards.)
You vote for a Democrat, and what do you get?
another day older and deeper in debt
St. Peter, don’t you call me, ’cause I can’t go
I owe my soul to the Marxists’ goals
The 3rd quarter bounce back is easily a reflection of the spirit of American enterprise and resilience. Politicians will want to take the credit. The 4th quarter, predictably, will have the Santa Claus effect, hmmm, hmmm, hmmm. Then starts a new year with a new federal budget in February. Tax revenues have been on the decline which indexes unemployment and corporate productivity as well as other federal revenues. Then the rubber meets the road if it is not too icy or too soon to talk about tax increases against the deficit. Index consumer confidence as the random variable in market charting. Quite a bit of the GDP increase is accredited to downsizing. Food costs remain inflated since last year which helps to keep the reported inflation index in check. Looks like a long cold winter.
Well, I dont think the economic climate lives or dies with any president, however, if it fails or revives the president does get the news. Also, lets face it…this president needs some good news, and he got it. Good Luck to Him !
It is purposeful, and they presume a state of denial (this is America, it couldn’t happen here!) will last long enough to allow them to develop a strong momentum.
Nationalization of health care will be the 3rd nail in our coffin.
“this president needs some good news, and he got it. Good Luck to Him !”
Uh. Yeah. He’s been looking real bummed and downtrodden out swinging his clubs on the golf course. You can tell he’s really suffering. Poor guy! *puke*
Good grief! Nothing says ‘crisis’ like a good game of golf and a smoke. &^(*&&%^%$JKHT^%#I!
4. Sherab Zangpo,
I caught that too. NOT GOOD. NOT GOOD.
Pelosi looks like they’ve upped her meds again.
So much for growing ‘old’ and ‘retiring’ in this
country. “SANCTUARY!”
@10. Poor Citizen: – … I dont think the economic climate lives or dies with any president …
Precisely.
The economy is almost entirely under the control of two entities which have virtually no accountability: the Fed and Congress. Congresscritters seem to be continuously re-elected (or we get replacements who are just as bad) no matter what damage they do. During the last 80 years or so, Congress has seen fit to legislate far beyond its Article I mandate. The Fed desperately needs to be audited and put under some form of oversight, if not eliminated entirely. Too many people pretend that the POTUS can be held responsible for Fed policies and, thus, the President is erroneously held accountable for the Fed’s excesses – at least when it’s politically expedient.
paul_unalaska@2:
“Barney ‘I make Elton John look tough’ Frank’s”
I don’t get that.
Could you please elaborate?
12. Delia:
“Good grief! Nothing says ‘crisis’ like a good game of golf and a smoke”
I agree, now watch this clip.
http://www.youtube.com/watch?v=Z3p9y_OEAdc
15., So you agree? GOOD! I’m so glad you folks are coming around.
Obama called the House legislation “another critical milestone in the effort to reform our health care system.” – Associated Press
I think what he meant to say was…
“…another criminal milestone in the effort to reform our health care system.”
Tom – the reason the NBER defines when a recession begins and ends is that economists associated with it did the original work to determine just when a recession begins and ends. Besides, I would rather have the NBER make the call then some government agency buffeted by a political agenda.
As for the recovery itself, I am not certain it will continue, although things might not get worse. A good deal of the recovery was due to cash for clunkers and rebates on housing — those $8,000 bonuses for first-time? buyers (with a question mark after “first-time” because people have been cheating about being first-time buyers). A lot of those subsidies which the government provided for those programs show up as a positive addition to GDP. The borrowing, though, does not show up as a subtraction until the taxes have to be paid, and that will be much later. So when the programs wind down, the rebound might fizzle. Moreover,to the extent that all the subsidies have done is to move the purchases of house and of new cars from the future to the present, there could very well be far fewer purchases of those items in the future, and that quite independently of any new taxes can act to depress GDP.
Also, also depressing the economy is all the uncertainty caused by the government’s health care plans (which would in effect nationalize 17% of the economy), the way the government is treating high-payed executives and the way it treated creditors of GM and Chrysler. All of that uncertainty it is creating very comparable to the uncertainty caused by FDR actions in the 1930s. Not for nothing did the unemployment rate stay up around 15% during much of the thirties. For those interested, read Amity Shlaes’ terrific book, The Forgotten Man, to see how FDR’s actions and the uncertainty it created stunted the economic recovery from the Depression. Look for the same while the Democrats are in control.
Has anyone seen the photo of Pelosi at the top of Drudge?
The only thing I could think of is a line from JAWS:
“Sometimes that shark looks right into ya. Right into your eyes. And the thing about a shark is he’s got lifeless eyes. Black eyes. Like a doll’s eyes. When he comes at ya, he doesn’t even seem to be livin’..”
If you subtract the 1.7 for the cash for clunker program from the 3.5 GDP you get 1.8 Then subtract the $8000 first time home buyer program from the 1.8 and you get what? I haven’t heard any numbers on the home buyer program but it has to be large. 3.5 my ass! This is a one time government balloon economy that says bust coming soon.
I think Obama will some day fight back against his critics. It will look like I’ve described in my blog:
http://hyphenatedamericans.blogspot.com/2009/10/swine-flu-vaccine-update.html
Permatan strikes again!
http://thinkprogress.org/2009/10/29/boehner-gop-72-hours/
The party of I don’t know.
Now and Then, Haaaaa!, thanks for the laugh. (Two jews sitting in a Nazi concentration camp talking about how bad the Third Reich is, a guard overhears and states, this is nothing, let me tell you how bad the Weimer Republic was.) Truly the worlds fools supply the greatest entertainment. Thanks again.
#18, my preference would be that we stick to the normal definition of 2 or more quarters of negative growth and be done with it. As long as the government data-gatherers are beyond political influence, and I believe they still are (for now), I can live with that, even though we have just seen that the government itself can manipulate results as you have described.
I’ve shown before that NBER’s judgment is questionable. They even acknowledge in their own Dec. 2007 determination that some of the metrics they said convinced them of a recession peaked in 2Q08.
They may all be individually brilliant, but collectively they did what a committee usually does, which is come up with something screwy. No other country that I know of allows a bunch of people from on high to tell them when a recession took place.
If the NBER is intellectually honest and sticks to its own guidelines, such as they are, they will recognize the manipulation of GDP (something Bush 43 for all his faults was NOT engaged in), deeply discount its significance, and weigh heavily the continued steep fall in employment, the increased and I believe unprecedented (since the Depression) worker disengagement I cited in the column, and bigtime falling incomes. I’m betting that instead they’re going to let the “big” 3.5% number dissuade them from doing so, because of the very political pressure you believe they’re insulated from.
This number was made based on projections from mid-August, during the Cash-for-Clunkers frenzy. I expect two downward revisions by the time the final number is released in December.
This is a “CEO’s recovery”, if it’s a recovery at all.
Tom – the definition you call normal — two quarters of negative growth — is a rule of thumb economists came up with after looking at NBER cycles, which until 2001 were generally had two or more quarters of negative growth. The 2001 recession is an interesting exception because there was only one quarter of mildly negative growth (and with the way GDP keeps getting updated every five years, someday that negative growth may disappear altogether).
As for the current recession, I don’t disagree with you about the NBER recession date of 4th quarter 2007. I think it was more like the summer of 2008, but the economists at the NBER were looking at a whole lot of underlying monthly series when they concluded the recession began in December 2007. I suspect the data they were looking may have been ambiguous and they made a judgment call based on those data, which is why we are questioning that dating.
But, all in all, I much prefer an independent, private entity make the call, whether it is right or wrong, than some political hack in the Administration. I would not put too much faith in the neutrality (or accuracy) of a government agency.
Finally, I think some might disagree with you about Bush manipulating the economy. In particular, the tax rebate he engineered in the second quarter of 2008 made it look like we would avoid a recession. Alas, it was a false signal. Some might say he was manipulating the economy. I would be more charitable and say he made a good faith effort to stave off the recession. In my opinion, Bush would have been better advised to have pushed for a permanent tax cut (and let the Democrats have to say no to it). BTW I think Obama should have done the same, but his political leanings and base simply will not allow him to do that.
#27 Jack, the two quarters of contraction definition of a recession has been around forever. See the the results of this NYT search from 1981-1990. I think it really goes back to at least the 1950s.
My point is that it shouldn’t be a judgment, and it wouldn’t be if we stuck with the two quarters of contraction definition. Sure, a govt. can (and just did) institute programs to stimulate growth in a manner not productive in the long-term and end the recession as defined, but then they’d risk a double-dip recession — as I believe we are.
The NBER was looking at ambiguous data in the first half of 2008 when it made its call, which is why it shouldn’t have made it.
I don’t think that 2Q08 was terribly influenced by the rebates, because about half of it didn’t get into consumers’ hands until June or later, and many people didn’t spend it. And yes, it should have been a permanent tax cut instead.