August 17, 2013
Obama's Phony Event: America's Economic Recovery
By Jim O'Sullivan
Almost begrudgingly and only recently has the media begun to report on the Obama administration's scandals, including Benghazi, the IRS, the NSA, Pigford, and others, in combination with his rapidly declining job approval numbers. Perhaps as a consequence, President Obama has been trying especially hard lately to sell his economic prowess of the past 4.5 years.
Unfortunately for Obama, the facts demonstrate very little economic progress to date during his tenure. Slow GDP growth, lagging job creation, constricted free markets, ballooning deficits and debt, growing and counterproductive regulation, crippling taxation, and the penalization of small business all make for compelling evidence that Obama's economic strategy is failing.
A survey and a realistic appraisal of available economic facts/statistics bring the following to light:
- The July unemployment picture essentially replicated the glacial progress made in new job generation seen since the end of the recession in 2009. The Bureau of Labor Statistics (BLS) reported the addition of 162,000 non-farm jobs in July, which demonstrated a decline against the average gain of 189,000 per month during 2012. The growth was, on closer inspection, at the lower end of the income spectrum and partially composed of 47,000 retail, 38,000 leisure and hospitality, and 13,700 wholesaling jobs -- fully 61% of the new jobs reported. The statistics also followed the trend that 77% of this year's new jobs are part-time in structure.
- The unemployment rate declined to 7.4%, a decline assisted by more than 250,000 frustrated job-seekers dropping out of the marketplace. The rate of 7.4% ended a record drought of 54 months of unemployment rates in excess of 7.4%. Nevertheless, the much headlined 7.4% unemployment rate is quite misleading, since an estimated 22 million Americans are underemployed or unemployed and not included in the unemployment calculations. The government does, however, track two statistics that indicate the extent of today's jobs paucity -- the U5 and U6 rates of labor underutilization that were 8.8% and 14.0%, respectively, in July.
- On a more macro level, the Census Bureau tracks monthly resident population growth. The average resident growth from April 2010 to November 2012 (32 months) equaled 185,684 per month -- or, by extension, an aggregate of 9,841,252 people have been added to the population since Obama's inauguration. As population grows, a corresponding number of jobs is needed just to maintain economic equilibrium. By contrast, the BLS reports an increase in employment of 2,132,000 net jobs from January 2009 to July 2013, or a mean monthly increase of 38,764 jobs. The difference in the two numbers is blindingly obvious...where are the jobs?
- Currently, 11,514,000 people are unemployed (a 7.4% rate) in a civilian labor force of 155,798,000. But as of this past Thursday, the BLS is reporting that an astonishing 89,957,000 able-bodied adults are sitting on the employment sidelines, thus creating a labor force participation rate of only 63.4%. Link this fact with over 8,900,000 individuals exiting the job marketplace during Obama's tenure, and the only conclusion that can be drawn is that a virtually jobless recovery is occurring.
- The MSM's ballyhooing of the previous quarter's gross domestic product (GDP) growth rate of 2.4% came to a screeching halt in late June. The Commerce Department revised the first-quarter GDP number from 2.4% to a tepid 1.8%. The initial 2.4% estimate marked the highest quarterly performance number since the 4th quarter of 2011, when GDP equaled 4.1%. GDP has has exhibited both significant volatility and a downward trend since the recession ended. In 2010, average quarterly GDP growth equaled 2.4%, which declined to 2.0% in 2011 and subsequently to 1.7% in 2012. The fourth quarter of 2012 saw a meager advance of just 0.4%. Given the first-quarter GDP performance of 2013, average quarterly growth for 2013 will struggle to equal 2012's appalling 1.7% level. The trend has triggered recent economist predictions that 2013 may grow at only 1%.
- Both household median income and personal disposable income continue to decline, although the rate of decline has slowed since the end of the recession. Median household income fell 4.2% during the recession and eroded by another 4.1% in the two years following the recession. The declines in income continue, as seen in the BLS July jobs report that shows not only a decrease in the average work week to 34.4 hours, but also a reduction in average hourly earnings for all employees to $23.98. Sadly, this reinforces the long-term trend of both statistics.
Other Notable Factors
- Less than 50% of working Americans now hold a full-time job. The BLS shows that 144,285,000 were employed in July, but only 115,505,000 -- i.e., 47% -- were employed full-time. And since the beginning of this year, fully 77% of the 953,000 jobs created were part-time...an eye-opening 731,000 part-time jobs.
- Homeownership fell to its lowest level in 18 years. Homeownership peaked in 1995 at 69.2% but has declined to 65% in the 1st quarter of this year, as reported by the Census Bureau.
- Over the previous four months, the MSM intermittently trumpeted a rebound in housing as an economic bright spot or at a minimum a precursor of a more economic good news to come. However, the Commerce Department reported an appreciable setback in June in the number of housing starts that has dragged into July -- i.e., work began on 836,000 houses (annualized rate), a drop from the 928,000 reported in May. Both prices and length of time on market of existing homes continue to vary dramatically by market.
- The Center for Immigration Studies released an analysis concluding that all job gains subsequent to 2000 can be accounted for by immigrants -- both legal and illegal. The report shows that 22.4 million immigrants held jobs at the outset of the year -- an increase of 5.3 million since 2000 -- while native-born Americans with jobs declined 1.3 million.
Many additional negative and discouraging economic realities can be identified -- ethnic unemployment rates, growing debt, deficit spending, food stamps, increasing poverty, oppressive regulations -- yet more citations will not build a stronger case against the Obama "economic recovery."
Today, if the same proportion of Americans were employed as was the case a decade ago, there would be almost 9 million more people working. Instead, two million discouraged adults have given up and left the workforce. A majority of Americans are not holding full-time jobs. With the Federal Reserve trying to stimulate the recovery with expenditures of $85 billion per month to "quantitatively ease" interest rates and spur capital investment, the specter of debilitating future inflation is growing.
No matter what President Obama may say, the recovery is a truly phony event, constructed on wishful thinking and happy talk by the administration and by some in the mainstream media. The "phony scandals" plaguing his administration, on the other hand, are quite real. It is up to the American people to decide which issue deserves more attention.