Commentary by James H. Shott
The headline in The
Washington Post trumpeted “U.S. adds 243K jobs in January; unemployment
rate drops to 8.3%,” and the story which followed provided the detail. “The
nation’s unemployment rate dropped for the fifth straight month to 8.3 percent,
its lowest level in three years, the Labor Department reported Friday, with
widespread hiring across the economy,” the story said. “The Labor Department
recorded gains in many parts of the economy including the restaurant business,
accounting, health care and retail stores,” and “the ranks of the unemployed
dropped to 12.8 million in January from 13.1 million the month before,” the
story continued.
President Barack Obama lost no time making hay in that
little bit of sunshine. "The unemployment rate came down because more
people found work, and altogether we've added 3.7 million new jobs over the
last 23 months," he said. And the San
Francisco Chronicle issued this rose-colored account: “With Friday's jobs
report punctuating the nation's steadily improving conditions, Mitt Romney and
his advisers are confronting an unexpected economic turnaround that threatens
to undercut the central rationale for his candidacy.”
Make no mistake: anytime an unemployed American gets a job
these days it is reason for happiness. But while the president, the Post and the Chronicle were satisfied with that little bit of information, there
is a good bit more that we need to know before popping the corks on the bubbly.
The rest of the story is that while 243,000 jobs were added
to the economy, more than four times that many people – 1.177 million– gave up
looking for work last month. If you want the unemployment rate to look better,
all you have to do is lower the number of people in the job market, and that’s
precisely what happened when those people dropped out. Furthermore, in the week
ending January 28, the advance figure for seasonally adjusted initial jobless claims was 367,000, and
that is 124,000 more than found work.
If 243,000 new jobs caused the unemployment rate to drop by
two-tenths of a percent, from 8.5 to 8.3 percent, when you add back into the
equation the 1.177 million that dropped out of the job market, the more
accurate unemployment rate is around 9.4 percent.
One of the many serious problems getting little attention
from an administration focused on putting the best possible spin on things is long-term
unemployment. Testifying before the House Budget Committee last Thursday, Federal
Reserve Chairman Ben Bernanke called the problem “particularly troubling.”
Economists at the Federal Reserve Bank of San Francisco compared
the number of unemployed with the number of job openings in the United States
and found that the main reason for the spike in long-term unemployment is that
there simply are too few jobs to be had. “It is likely that the recent pattern
of massive job losses and a weak jobs recovery is the primary explanation for
elevated unemployment duration,” according to the authors, Rob Valletta and
Katherine Kuang. Twenty-four million Americans are unemployed, under-employed
or have stopped looking for work. Today’s labor force is the smallest since the
1980s.
So, despite all the grand rhetoric emanating from Democrat
circles in Washington, things aren’t exactly peachy in Employment Land. The National
Center for Policy Analysis reports figures showing a big “fail” from the $787
billion Obama stimulus: “In February 2009, when the American Recovery and
Reinvestment Act (ARRA) became law, 12.5 million Americans (8.1 percent of the
work force) lacked jobs. In December 2011, with 80 percent of the ARRA's
government ‘stimulus’ money spent, 13.1 million Americans (8.5 percent of the
work force) lacked jobs.”And the near future holds no better news. The Congressional
Budget Office (CBO) forecasts that the unemployment rate will remain above 8
percent both this year and next.
Mr. Obama was also spinning wildly on the nation’s economy. "We're
also seeing more optimistic economic forecasts for the year ahead, in part due
to the package of tax cuts I signed last month," he said. But the CBO sees
things differently. Growth in GDP is forecast to be poor, with real GDP growing
by an anemic 2.0 percent this year and just 1.1 percent next year.
With those kinds of results after three years of liberal,
big-government policies, perhaps it would be wise to try something different.
During and after the campaign Mr. Obama often reminded us
that we were suffering the most serious economic crisis since the Great
Depression. Yet, he wasted three years “not letting a good crisis go to waste,”
focusing on his ideological dreams, like ruining the nation’s health care
system by turning it into just one more government-run nightmare; spending
nearly a trillion dollars on a stimulus program for projects “that weren’t as
shovel ready as we thought”; throwing away more than a billion taxpayer dollars
on green energy companies that have now declared bankruptcy; and blocking every
effort to develop domestic energy resources.
Now the president tells us that he is at long last focusing
on unemployment, if only out of political necessity. He may have no idea how to
help the economy repair itself, but he sure does know how to campaign.
Cross-posted from Observations
No comments:
Post a Comment