Under Obamanomics, America Stumbles Into Another Recession
The Democratric Party controlled mainstream media reported the November unemployment report as “better than expected.” But in reality it showed that America is stumbling along into a second Great Depression under “Obamanomics” and associated “Progressive” fallacies.
Another 350,000 Americans dropped out of the labor force in November, bringing the total dropping out since President Obama entered office to 5.4 million. That is unprecedented for any such extended period since the Great Depression, and probably before. Yet, none of these people are counted as unemployed, because they are counted as not in the work force at all.
That declining work force is the only reason the unemployment rate was reported as declining to 7.7%. At this pace, Obama is on track for 0% unemployment, when the labor force declines to zero as well. If America just had the same labor force participation rate as when Obama entered office, and so many had not dropped out of the work force, the unemployment rate would be 10.8%, not 7.7%.
While the Bureau of Labor Statistics (BLS) reported 146,000 new jobs created in November, it also adjusted downward the jobs reported created for September and October by 49,000, leaving the total net new jobs created in November at 97,000. (The 146,000 new jobs is counted from the new base reduced by 49,000, so the net new jobs created in November were truly only 97,000). The number reported as dropping out of the work force was 3.5 times greater than the number of net new jobs created in November.
The BLS reported 12 million Americans unemployed in November. Unemployment was most severe for the groups that have supported Obama the most – blacks (13.2%), Hispanics (10.0%), and youth (23.5%). The new jobs created since Obama became President amount to less than 1% of the new additions to the working age population (the growth in young adults plus immigrants).
The BLS also reported the number of Americans working part time for economic reasons at 8.2 million for November. “These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job,” the BLS explained.
Another 2.5 million Americans were reported as marginally attached to the work force in November. “These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months,” the BLS explained.
That amounts to 23.7 million Americans unemployed or underemployed. The BLS reports the unemployment rate (U6) including them as 14.4% for November. That is already Depression level unemployment.
But that number only includes workers who have become discouraged and dropped out of the work force within the last year. Starting in 1994 under the Clinton Administration, the BLS stopped counting as unemployed in any unemployment rate number at all the number of discouraged workers who had become discouraged and dropped out of the work force for more than 1 year. Those Americans are counted, however, at Shadowstats.com, which reports the total unemployment rate for November including them to be a Depression level 22.9%.
The recession was scored by the National Bureau of Economic Research (NBER) as starting in December, 2007, and ending in June, 2009. That was already the longest recession since the Great Depression. The much bigger problem is that there has been no real recovery since then. What we have suffered instead, according to the numbers, is the worst recovery since the Great Depression.
Total employment as of November was still 3.2 million jobs below its peak just before the recession started, 5 years ago! Yet since then, the working age population has increased by 11.2 million. That is why America is now still 14.7 million jobs short of full employment.
This is the worst performance since the Great Depression, and probably before. In every other recession since the Great Depression, employment soared past its prior peak within a year or two after the recovery. During Reagan’s recovery, 60 months after the prior peak, when the recession started, employment was breaking new records, with jobs 7.8% above that prior peak. As Louis Woodhill reported at realclearmarkets.com on December 10, “If the Obama recovery had been as strong as the Reagan recovery, there would be 14.8 million more Americans working right now.”
Obama’s poor jobs record reflects his poor record of economic growth. Since the start of the recovery 13 quarters ago, real economic growth has averaged 2.21%. During the first 13 quarters of the Reagan recovery, real economic growth boomed by an average of 5.67%, more than 2 ½ times higher. Obama apologists can’t argue that Obama’s recovery is so bad because the recession was so bad. The American historical record is the deeper the recession the stronger the recovery.
That poor record of jobs and economic growth is the reason why middle class incomes have declined so sharply under Obama. Median household income has declined by over $4,000 a year since Obama became President, or the equivalent of losing one month’s income every year. Moreover, the decline has been twice as fast after the recession supposedly ended than during the recession. As the Wall Street Journal summarized in its August 25-26 weekend edition, “For household income, in other words, the Obama recovery has been worse than the Bush recession.”
That poor record on jobs, incomes, and economic growth is also the reason that poverty has soared under Obama. More Americans are in poverty today than at any time in the more than 50 years that the Census Bureau has been tracking poverty. This is how we know that Obama loves poor people, because he is creating so many of them.
How long should America give Obama to get the country past the recession? Before this last recession, America’s recessions since the Great Depression lasted 10 months on average, with the longest previously at 16 months. But here we are 60 months after the last recession started, and still no real recovery. Based on the historical record, we should be completing now the third year of an historic boom.
The chief excuse of the Obama apologists is that what we have suffered was not just a recession, but a financial crisis, and, they argue, recovery from a financial crisis takes a lot longer than recovery from a recession. But that is not the experience of the American, free market, capitalist economy. The experience of the American economy is reported in full at the National Bureau of Economic Research, as just cited above. That is the standard by which the performance of Obamanomics is to be judge.
The Obama apologists rely on the book, This Time Is Different: Eight Centuries of Financial Folly, by Carmen Reinhart and Kenneth S. Rogoff. But that book changes the subject, basing its argument on data that “covers sixty-six countries over nearly eight centuries.” It “goes back as far as twelfth century China and medieval Europe.” The data “come from Africa, Asia, Europe, Latin America, North America, and Oceania.”
But that experience does not set the standard of expectations for post depression, free market, capitalist America over the last 70 years, the most powerful economic engine in the history of the world.
[First published at Forbes.]