The Recovery That Wasn’t There

One thing that may have depressed Mr. Obama's enthusiasm as he gave his acceptance speech was that he knew what Friday's jobs report was going to say. What it said was awful. The only good news was that the unemployment rate dropped from 8.3% to 8.1%, and that was really bad news. The unemployment rate measures people looking for work. It dropped not because of job creation but because 368,000 people stopped looking and dropped out of the labor force. If the number of people still in the labor force were the same as in 2009, the unemployment rate would be over eleven percent.

There were 96,000 non-farm jobs added in August, well below expectations. The manufacturing sector contracted in August and lost 15,000 jobs. The Labor Department revised downward the number of jobs created in June and July by 41,000. We are nowhere near the rate of job creation we would need to get back to pre-recession levels, let alone resume typical post-recession progress, and job growth has been slowing. The average monthly gain in 2011 was 153,000 jobs per month. The average gain for 2012 so far has been 139,000. Workforce participation overall is back down to the 1981 level and the level for men has been this low since 1948. It gets worse when you dig deeper into the numbers. Here is Mortimer Zuckerman from the WSJ:

The alarming numbers proliferate the deeper you look: 40.7% of the people counted as unemployed have been out of work for 27 weeks or more—that's 5.2 million "long-term" unemployed. Fewer Americans are at work today than in April 2000, even though the population since then has grown by 31 million.

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.

This is supposed to be an economic recovery. It is the recovery that isn't there. Incomes have declined more during the recovery than they did during the actual recession. The unemployment rates are higher for every part of the country than before the recession began.

The point is not whose fault this is. The point is what it is. It is dreadful. The great American engine of job creation has all but shut down. The fun part comes when you consider what happens next. It is possible, of course, that we are only in the midst of an elongated recovery. Soon now economic growth will pick up and, if does not soar, it will at least rise steadily. In that case the winner of this year's election will enjoy a great gift through no fault of his own.

It is also possible that this is all the recovery we are going to get and that what comes next is another recession. If that is the case, then the lucky guy may be the guy who loses this year. It bears mention that we have been running deficits of $1.3 trillion dollars per year. The federal debt crossed the sixteen trillion mark while the Democrats were celebrating in Charlotte. That figure doesn't include, of course, the fiscal insolvency of many of our great states. Money borrowed is wealth that can't be spent on something else. Perhaps we have reached the point that there are simply no resources left to fuel a traditional economic recovery.

Comments

[larry kurtz]

Hey, Ken: does the GOP pay you by the smoke or by the mirror? If the economy is flagging: blame the Senate earth haters' leader.

http://www.thedailybeast.com/articles/2012/09/09/bad-economy-blame-it-on-mitch-mcconnell-the-gop.html

[Donald Pay]

Welcome to Republican economics, where what's been obvious to most of us for decades is just beginning to turn some wheels in the slow-on-the-uptick conservative mind. Your problem is you focus on just the last four years. Start analyzing the wealth of data, and you'll find the middle class has been flat or declining over those years while the upper class has been syphoning off all the money.

[larry kurtz]

Obama: 309. Romney: 229.

http://election.princeton.edu/todays-electoral-vote-histogram/

[Bill Fleming]

On the chart, KB what are the values on the left all about?

[Ken Blanchard]

Donald: I can well understand why you want to ignore the last four years. I would only point out that 1985-2012 is more than four years.

Bill: I don't know!

[Donald Pay]

KB,

It's nice you criticize me regarding the chart you admit you don't know about. I did a little research, something you seem not to do much of, and found the following chart:

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=AHETPI&s[1][transformation]=ch1

This chart appears to be much like yours, except it seems to have the correct values. The chart shows the percent change from year to year of the earnings of production and non-supervisory workers. In case you don't know what that means, it is chart shows how much of an increase in earnings people have had from year to year. Earnings come from a number of places, but for this set of workers the biggest chunk of earnings would be calculated as:

(wages X hours) + (1.5 wages X overtime hours)+ (Unemployment Compensation)=Earnings

So, what the last four years of this chart shows is how the lower middle class has been hit hard by the Bush Recession. The correct numbers also show that these people's earnings haven't grown very fast no matter what year we are talking about. I guess it's something we liberals have been saying for decades, but that conservatives have a hard time understanding.

[Bill Fleming]

KB, good. I don't either. Thanks for the great answer. :^)

[Donald Pay]

Now, just to look at the data in a different way, KB, look at the actual dollars earned by these workers.

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=AHETPI&s[1][transformation]=ch1

What we see is that recessions tend to bend the curve of actual earnings a bit. People who are employed in this sector get smaller raises, but earnings continue to increase even through recessions.

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[Edna N Ramirez]

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