Former Obama supporter Mort Zuckerman writing in the Wall Street Journal:
We are still almost five million payrolls shy of where we were at the end of 2007, when the recession began. Think about that when you hear the Obama administration’s talk of an economic recovery.
The key indicator of our employment health, in all the statistics, is what the government calls U-6. This is the number who have applied for work in the past six months and includes people who are involuntary part-time workers-government-speak for those individuals whose jobs have been cut back to two or three days a week.
They are working part-time only because they’ve been unable to find full-time work. This involuntary army of what’s called “underutilized labor” has been hovering for months at about 15% of the workforce. Include the eight million who have simply given up looking, and the real unemployment rate is closer to 19%.
In short, the president’s ill-designed stimulus program was a failure. For all our other national concerns, and the red herrings that typically swim in electoral waters, American voters refuse to be distracted from the No. 1 issue: the economy. And even many of those who have jobs are hurting, because annual wage increases have dropped to an average of 1.6%, the lowest in the past 30 years. Adjusting for inflation, wages are contracting.
The best single indicator of how confident workers are about their jobs is reflected in how they cling to them. The so-called quit rate has sagged to the lowest in years.
Older Americans can’t afford to quit. Ironically, since the recession began, employment in the age group of 55 and older is up 3.9 million, even as total employment is down by five million. These citizens hope to retire with dignity, but they feel the need to bolster savings as a salve for the stomach-churning decline in their net worth, 75% of which has come from the fall in the value of their home equity.
One more number representing the utter failure of Obama’s policies: 8 million Americans have quit looking for work.
We are in uncharted waters as far as jobs are concerned. It’s fair to say we are in a jobs depression given the massive numbers of unemployed, discouraged workers, and involuntary part-time workers.
Zuckerman agrees:
We are experiencing, in effect, a modern-day depression. Consider two indicators: First, food stamps: More than 45 million Americans are in the program! An almost incredible record. It’s 15% of the population compared with the 7.9% participation from 1970-2000. Food-stamp enrollment has been rising at a rate of 400,000 per month over the past four years.
Second, Social Security disability-another record. More than 11 million Americans are collecting federal disability checks. Half of these beneficiaries have signed on since President Obama took office more than three years ago.
These dependent millions are the invisible counterparts of the soup kitchens and bread lines of the 1930s, invisible because they get their checks in the mail. But it doesn’t take away from the fact that millions of people who had good private-sector jobs now have to rely on welfare for life support.
“Invisible counterparts of the soup kitchens and bread lines,” indeed. Many economists argue that the only reason we don’t have economic deflation — where prices for goods and services fall off a cliff — is the actions of the Federal Reserve, which has pumped trillions of dollars into the economy. We may yet pay for those actions by the Fed with a bout of inflation later. But Chairman Bernanke has said that staving off a real economic depression is the Fed’s top priority.
Zuckerman’s remedies are Keynesian “investments” in infrastructure with deregulation thrown in the mix. But with deficits running above a trillion dollars, how can Congress in good conscience contemplate massive new spending schemes? Targeted spending is more to the point with healthy cuts in tax rates so that businesses are encouraged to begin hiring again.
The great engine of democracy — the American economy — has stalled out. Voting out President Obama in November will be the first step in revving it up again.
It never fails to amaze me the lack of understanding of basic economics among our elected representatives and the population as a whole. Every dollar the government (local, state and federal) ultimately comes from the private sector, whether that dollar comes from taxes, borrowing or even printing new money. So, those are dollars the private sector cannot spend. And, yes, some of those dollars come back in the form of governments purchasing private sector goods and services, but no where nearly enough to be “stimulating.” We have to get government spending under control and reduce regulations in order to free up the small business engine that can pull us out of this economic mess.
You are WRONG, sir. Those dollars NEVER come back. They are frittered away INSTANTLY.
You and I are forced to pay for services we never wanted. We employ people we never asked to perform a service. You can say those people turn around and put “their money back into the economy”, but that’s a lie. They put a very tiny portion of that money back into the economy.
Those people who work for the government CONSUME most of the money – just as a fire consumes the wood it’s burning. You don’t get the carbon atoms BACK, they disapate into the air as carbon dioxide and water vapor. All you’re left with is the resultant ash.
This assumes the person being paid receives all the money taken from us. He doesn’t. It must pass through many sets of hands, first! Consider the ludicrous notion of the tax dollars those people pay on their income. Good, GOD! Someone who’s paid from our income taxes, paying income taxes.
Imagine water swirling uselessly in little eddie-currents. Now you’re getting the picture.
I think I’m seeing a contradiction here: “even printing new money”, how does that compete with dollars from the private sector? It’s new money. You might say that it devalues all the money currently in circulation. But that only holds true in an inflationary environment, which this certainly is not (in spite of some who claim commodity price rises are a result of monetary policy, I’m not one of them). In any case, the USD vis-a-vis world currencies has been remarkably stable. The same argument would hold for borrowed money. Where’s the competition? Where am I going wrong here?
“In short, the president’s ill-designed stimulus program was a failure.”
Why cannot seemingly intelligent and perceptive people say it or in some cases see it? Comrade Obama’s “stimulus” wasn’t meant to stimulate the general economy. It was meant to put some walking around money in the hands of his buddies and the Democrat front groups. While the Republican controlled Congresses and state governments in the Clinton and Bush years let far too much money go to Democrat front groups, they were still fairly lean years for any but the construction unions and contractors who sucked at the public construction/transportation teat. Comrade Obama through almost a trillion bucks out there to the unions, poverty pimps, and other front groups to buck them up and make up for the lean years. In that sense, the stimulus was anything but a failure and remains instrumental in his maintaining a realistic shot at being re-elected.
yes, we are in a depression, but the political con men are hiding it by bankrupting the country to buy off their supporters.
The statistics are designed to make the political criminals look good. The fact that they are as bad as they are, and that smart observors can detect the truth simply means that the situation is far far worse than the general population suspects.
It’s the equivalent, on a personal level, of losing your job, and running up 50,000 in credit card debt, all the why cheerily explaining to your friends and relatives that you have everything under control. Everybody knows in that situation that the hammer will fall soon, and when it does, your lifestyle is going to be 25% of what it was previously.
The same thing is inevitable for the country if the course isn’t corrected immediately. Nobody can predict accurately when the hammer will fall on the country, but it will, and it won’t be 50 years away either; more likely less than 10 years. (and an even bigger risk is that traditionally, political criminals have covered their rears in similar situations by starting wars. Pick your poison, poverty or young men dying in droves for an uncertain outcome.)
If Obama is re-elected the implosion WILL hit early within his second term. Under Ronmey we may be able to kick the can out past his first term but not his second unless he starts cutting entire government departments such as Education, Housing…
Mort endorsed Obama in 2008. Was he stupid then, or is he stupid now, or is he still stupid? Thus far he has not endorsed Romney, so I assume that he will continue to support Obama for re-election. Considering his remedy is to just a “better” stimulus, I have to assume that he remains stupid.
Look, this article is crazy! EVERYONE I know is doing well. I was just at a cocktail party in the Upper East Side. The wine and cheese plate were fab! And all I heard was how everyone was doing great. One gentleman, who works at the same investment house as my life-soul partner, was talking about how he is making a killing trading some sort of foreign securities, or something. Get your heads out of your arses! People are doing much better now than when that dumb Bush was in office!
Some are, but then how do you explain unemployment, declining real wages and the rest of the statistics. My wife works for a small company that is spiraling down. Even during the Great Depression there were people who did well. I can’t remember which book it was now but essentially, if you had a job and could keep it, things weren’t so bad. But if you lost your job, there wasn’t one to be found.
Check out flyover country and tell them things aren’t so bad.
“Zuckerman’s remedies are Keynesian “investments” in infrastructure with deregulation thrown in the mix.”
I’ve had my belly full of “investments” in infrastructure. Been there, done that in 2009. We spent almost a trillion dollars in “stimulus,” most of which was supposed to go to “shovel ready jobs.” Remember those? All those wonderful government “shovel ready” jobs that were going to kick-start the economy and bring us in to the promised land of economic recovery. And what did a trillion dollars get us? Nothing. It hired a few union workers for a few months and that’s it. Unemployment has NOT gone under 8% since Obama has been president, underemployment is much, much, worse, and all the economic indicators are that we are sliding back into a recession. So why should we re-elect Obama??? Give me a break.
I can only say one thing. If Obama is re-elected, then I can only conclude that socialism has now taken over in the United States. Americans don’t mind being supported and subsidized by the government. They think it’s all “coming to them” and that it’s basically “free” stuff. After all, Obama will tax all those nasty “rich” people to help everybody else, right? Bunk. If you look at the 21 new taxes that are going to come on line because of Obamacare, most of them will hit the middle class (especially the mandate/tax, which will hit the younger workers the hardest). And if you’re on a pension and living off of your 401K, just wait and see what Obama is going to do to the tax on dividend income.
Nothing is free in life, and if Obama gets a second term and nothing is done to stop the spending in Washington, not only will the economy collapse, but we will start seeing massive civil unrest (as in Greece) when the government starts running out of money to pay for all these benefits. And, trust me, I don’t think Americans will handle massive poverty as well as the Greeks. Not in this day and age. If we see a collapse in the welfare state here in America, expect massive civil unrest and a huge increase in crime. Obama promised to transform America when he became president. If he gets a second term, boy will he get his wish. And in a very bad way.
And all those under-employed and unemployed people are going to vote for Obama, because they are afraid that Romney will turn off the gravy train. We’re screwed.
We will? really? What do you think I am? Daft? I may be underemployed, but I’m hardly an economic illiterate.
One of our most prominant local newspaper reporters recently said that the county’s unemployment rate stopped increasing when Obama implemented the stimulus, so it must have worked.
What he ignores is his own earlier study that showed that building unneeded houses was a huge industry in our county, and when the bottom fell out of that market even before the actual crash, the local Economic Development Commission says that 10,000 construction workers left the county. Gee, might that have not stopped the unemployment numbers from going up, when 10,000 workers pick up and move?
But the fact is, they are still closing stores here, and for the most part no one is moving into the empty space left behind. And the appraised values of homes are still going down.
I recently pulled my old files on the employment data from the BLS and imagine my surprise that the numbers have been changed sometime between now and June, 2010, to represent a better employment picture. i.e. a printout from 2010 shows May, 2010 with a 9.7% unemployment rate. Current charts from the BLS now show May, 2010 with a 9.6% rate. But the biggest shock was January, 2009. My printout from June 7, 2010, shows January, 2009 with a 9.4% unemployment rate. Current BLS charts show May, 2009 with a 7.8% unemployment rate.
Month after month, the charts have been changed in the last year; to represent lower unemployment in the past, higher employment numbers and fewer in the civilian work force.
Seems that this administration is playing fast and loose to make things look better than they really are, and doing it by having the BLS rework the numbers.
Not to be too paranoid, but this is a problem with getting access to historical information on line. When we had a reference book on our bookshelf, no one could reach into it and change it.
If you read Vox Popoli’s The Return of the Great Depression he talks about how the government routinely updates the statistics. Very few ever pay attention to that though.
“The Private Sector is doing just fine”
Time to roll out the guillotines …
“healthy cuts in tax rates so that businesses are encouraged to begin hiring again.”
General tax rate cuts won’t do much.
Executives (in academia and business) are in need of more precisely direct incentives to resume hiring US citizens rather then cheap, young, pliant foreign labor with flexible ethics.
Today, they play all kinds of games to avoid interviewing. They place ads in places where Americans with the applicable knowledge and skills are unlikely to see them. They don’t include telephone numbers and e-mail addresses of their hiring managers in those ads. Investments in new-hire (and retained employee) training are not what they used to be, nor are they as willing to relocate new-hires or retained employees, nor to invest in security clearances for those jobs which require them but instead try to get those jobs declassified. They hire immigration lawyers to coach them in how to declare all US applicants to be “disqualified” regardless of knowlege, specific skills, intelligence, creativity, industriousness, and experience.
The census and BLS numbers always go through a massive revision shortly after every decennial census. The employment surveys (household and establishment) are of a survey sample. The results are adjusted by a multiplier to align with the estimated population. After the whole-USA census, those multipliers are adjusted in light of the more certain whole population statistical “universe”. Over the course of each decade the estimates tend to drift away from reality, and these adjustments are necessary.
“And all those under-employed and unemployed people are going to vote for Obama…”
He** no! And the part-time vs. full-time under-employment measure is only one of many. What we’d really like to see is an estimate, e.g. of the numbers of Nobel-rank physicists who are in survival jobs driving repair shop courtesy vans (classified by BLS as fully-employed taxi drivers and chauffeurs), software architects who are pet-sitting (classified by BLS as fully-employed pet-sitters), research bio-physicists who can get only occasional temp gigs teaching at jucos (classified as fully-employed post-secondary teachers), lawyers employed as document compilers for a publisher, mechanical engineers “administering” e-mail servers or maintaining intra-company data-bases, mathematicians doing data-entry and massage, former US construction workers and meat-packers and fishery workers and machinists displaced by cheaper illegal aliens and Russians on conference attendance visas…
And one of my favorites — software engineers with an MS, JD and/or PhDs who are Mensa members teaching the occasional extension class to those brilliant, can’t live without them guest-worker geniuses who couldn’t program their ways out of a bit-bucket… because no American could possibly know what they know, ahem. (Let me summarize that: Americans teaching the guest-workers because no Americans could know what the guest-workers who are being taught by the Americans know, as the American teachers figure it all out on their own time to be able to teach the guest-workers what no American could possibly know… Around and around we go.)
http://www.kermitrose.com/jgoEconData.html
When the money runs out–when even the treasury can’t print enough of it to matter–when, as in Germany, wheelbarrows of currency wouldn’t buy a loaf of bread–then what? Where will the money come from to pay for it all? My money in the social security trust fund has been looted–and now they call it an “entitlement”. Our 401k plans are in similar jeopardy. Oh, please….don’t tell me that it is safe from the looters. Never mind the additional tax on cap gains—trivial in comparison to what the looters have in mind. Even if they don’t take it–think Germany after WW1…….how many wheelbarrows of money do you have in that 401k? Congress is on the road to becoming redundant. Don’t believe it? Immigration amnesty for the “children” of illegals…..executive order. Removing the work requirement from the welfare reform act……executive order. Cap and trade…..EPA will implement it even though Congress rejected it…… Keystone pipeline……nope….executive order. Do you think for one moment that Obama won’t go after prosperous states like North Dakota to bail out the bacchanalia of California and NY (apologies to Upstate NY)? The Supreme Court……a joke. The twists and turns of Justice Roberts vis a vis Obamacare are beyond funny. Fair share? What happens when there is no more “share” to loot–fair or otherwise? What exactly would Obama do with the mere pittance that would result from “taxing the rich”? Piss it away on another stupid idea. Shovel ready jobs? Those too were reduced to a presidential chuckle. Half a billion to Solyndra–think about that number. Half a billion to a company that employed one of Obama’s big fundraisers….half a billion to a company that had no chance–NO CHANCE of succeeding. GM bailout? Talk to the bondholders who got completely and utterly screwed. Talk to the Delphi/GM employees (the non union folks) who saw their pensions evaporate after the GM bailout. Bain Capital a vulture capitalist? A peehole in the snow compared to Obama. At least Bain makes money. If Obama gets re-elected all the shackles (and there were damn few of those) of having to run again are gone. I give us 18 months until wheelbarrows will be in short supply.
Solution scenario:
Totally disband the Depts of Energy, Commerce, Agriculture, Education, HHS, and fire 90% of the staff of the remaining agencies. Take all that labor and send them to harvest our crops in California and the midwest at minimum wage (which is way more than the illegals get but way, way less than they get now). That would get all the college radicals out of their positions of influence, solve the illegal immigration problem, and solve the federal budget problem all at once.
Just wash your vegetables very carefully.
“But Chairman Bernanke has said that staving off a real economic depression is the Fed’s top priority.”
This is a way to make things worse. If we took our medicine and learned our lesson this would have been a severe recession and we would be done with it. GDP is a farce as it measures government spending as part of economic activity. So as we pull more resources away from the productive sector and give it to the consumption sector we can call it progress. GDP was formed when government and information science were both very limited and it was the best idea going. We are at this point chasing a poor metric and one that supports some bad Keynesian economics without regard to long-term consequences. But the Politicians look good today, so of course that is what is important.
Unfortunately that seems to be the pattern. We enjoy the good times and ignore our impending bad times. Casandra is vilified and the boy who points out the Emperor has no clothes is ignored.
By my estimate only about 30% of people have the capacity to seriously plan for the future (look at who has saved enough money for retirement).