Four More Years of This?

Democratic Presidential Candidate Barack Obama’s Deputy Campaign Manager, Stephanie Cutter, had some…interesting…things to say recently.

Well, I think that worker probably has a good understanding of what’s happened over the past four years in terms of the president coming in and seeing 800,000 jobs lost on the day that the president was being sworn in, and seeing the president moving pretty quickly to stem the losses, to turn the economy around.  And over the past, you know, 27 months we’ve created 4.5 million private-sector jobs. That’s more jobs than in the Bush recovery (or) in the Reagan recovery.

Hmm….

The Investor’s Business Daily editorialist had a few things to say about her claim.

She starts counting private-sector job growth under Obama in February 2010 and, sure enough, in the 29 months since then (not 27 as Cutter says), there have been 4.5 million private-sector jobs created, according to the Bureau of Labor Statistics.

February 2010 was fully eight months into the economic recovery.  So Cutter has simply picked the worst month under Obama as her starting point….  In the aftermath of the 1981-82 recession, private-sector jobs bottomed out in December 1982, the month after that recession ended.  Twenty-nine months later, the private sector under Reagan had created 8 million jobs—nearly twice as many as under Obama.  How about Bush?  …if you use the Cutter method, the private sector created 4.7 million jobs in the 29 months after July 2003, when the job market bottomed.  In other words, Bush beat Obama by his own preferred measuring technique by 200,000 jobs.

What’s more, after 29 months of allegedly stellar job growth under Obama, the jobless rate is still 8.3%.  By this point in the Reagan and Bush jobs recoveries, the unemployment rate was 7.2% and 4.9%, respectively.

It’s important to note, too, that Obama continues to offer not least minim of evidence that these created jobs have resulted from his policies in particular, and not from the normal economic business recovery that follows any recession—only now with the recovery rate suppressed by his policies.

And there’s this tidbit that bears on Cutter’s claim.

In January 2009, the month President Obama entered the Oval Office and shortly before he signed his stimulus spending bill, median household income was $54,983.  By June 2012, it had tumbled to $50,964, adjusted for inflation. … That’s $4,019 in lost real income, a little less than a month’s income every year.

[E]ven if you start the analysis when the recession ended in June 2009, the numbers are dismal.  Three years after the economy hit its trough, median household income is down $2,544, or nearly 5%.

Some jobs he’s “created.”

Now, isn’t Cutter the one who spoke Obama’s lie about his Republican opponent being a felon?  Isn’t she the one who carried Obama’s denial of all knowledge of his SuperPAC’s ad accusing his opponent of killing a woman with his practices at Bain?  Why, yes.  Yes, she is.  Can anyone take seriously anything her mouth talks about?

A larger question: can we afford four more years of an administration so plainly out of contact with the reality of our current economic strait?

 

h/t Richard Fernandez of Belmont Club

Household Income

How are we doing in the post-recession “recovery” under the Progressive policies of the Democratic Presidential Candidate Barack Obama?  One indication comes from Sentier Research and a report produced by their Gordon Green and John Coder, Changes in Household Income During the Economic Recovery: June 2009 to June 2012. (normally, I provide links to the documents from which I quote, but the folks at Sentier charge for their reports; I’ll not defeat their purpose. The report can be found at their site, here.)

The following graph from the report shows the policies’ impact on incomes of various household types in the period since 2009.  It hasn’t been good for anyone.  Green and Coder normalized household incomes, setting per cent changes to 0.0% as of January 2000 (as in the graph) and to a Household Income Index with the income levels of January 2000 being 100.0.

Moreover, they noted that household income has remained poor and relatively static after the recession “ended.”  Having fallen from a start-of-recession HII peak of a shade over 100 to 96 at the “end,” household incomes continued to fall over the following year to roughly 92 and have remained static there for the last two years.  In other words, at the official end of the recession, incomes were roughly 96% of their pre-recession levels, and since 2010 have remained static at a lower 92% of pre-recession.

The authors pointed out a number of factors related to the drop in HII, including this one:

Another important factor contributing to the steep decline of the HII is the sharp increase in the median duration of unemployment not only during the recession but also during the economic recovery, and its tendency to remain at a very high level.  During the recession, from December 2007 to June 2009, the median duration of unemployment increased from 8.4 weeks to 17.4 weeks.  During the economic recovery, the median duration of unemployment increased from 17.4 weeks in June 2009 to 25.5 weeks in June 2010, and then fell to 19.8 weeks in June 2012.

Notice that unemployment duration after the recession “ended” remains above the in-recession rate.

Meanwhile, over 20 House-passed jobs related bills have continued to languish in the Democrat-controlled Senate in the period since 2010, when unemployment remains above in-recession levels and household income remains depressed compared even to its in- and immediately post-recession levels.

A Few More Thoughts on Employment

The Beveridge Curve is a means of depicting the relationship between the unemployment rate and the number of jobs available in an economy.  An example of this curve is given by a Federal Reserve Bank of Cleveland article, which asks “Has the Beveridge Curve Shifted?” and is presented below.

Moves along the curve indicate increasing job openings in a growing economy associated with decreasing unemployed workers, or decreasing openings with increasing unemployment in a shrinking economy.  The curve itself can move, also, as structural mismatches between employers’ needs and employees’ capabilities change.  Such mismatches can be driven by technology that creates a gap between skills needed and skills possessed, or job location vs employee location—or by long-term unemployment, which destroys existing job skills that otherwise would be a good match for existing skill needs.

But in such cases, we’d expect the curve to shift back as such mismatches clear (and shift again, as new mismatches develop).  It’s normal for economies to expand and contract on a shorter time frame, though, than that on which structural shifts occur—it can take months or years to retrain, for instance, whereas an economy can contract in a matter of months (typically, in the US, the current dislocation, or those of the 1970s or 1930s notwithstanding).  In fact, the Fed’s article points out that such movements of the curve itself are normal behaviors for our economy in the post-war period.

That’s a long-winded entry into the purpose of this post.  There are two graphs that indicate the failure of the present administration’s economic policies, especially as those policies impact employment capabilities in our economy; both of these are from  Sober Look.  The first graph is this one:

This shows just the sort of structural shift described above, and the shift didn’t occur until after the recession was over—and recall that the recession ended in Spring 2009, before any economic policies of Democratic Presidential Candidate Barack Obama could have taken effect.  Even his $800 billion Stimulus Act spending had not had time to have any effect at the time of the recession’s official end.

Notice that the pre-recession unemployment vs job openings part of the curve is entirely consistent with what we’d expect in a healthy economy—lots (relatively) of openings and full employment, with fewer openings associated with moderately higher unemployment.  During the recession, the decreasing availability of jobs and increasing unemployment followed that curve all the way out to the peak unemployment near 10%.

After the recession, though, and since—a period in which Obama’s economic policies have been able to have their full effect—we see the curve’s shift: even though jobs are becoming more available, unemployment is remaining high, and the drop-off in unemployment, such as it is, is following a higher level of jobs availability—there is a higher mismatch between jobs and job seekers.

This next graph illustrates a major reason why.

This graph shows the number of Americans who’ve been out of work for 27 weeks (6+ months) or more as a per cent of total unemployed.

Notice that sharp, and so far sustained, rise in this long-term unemployment during Obama’s term.  This long-term unemployment produces one of those mismatches described above—the skills mismatch, this time driven by skills destruction through non-use from that long-term unemployment.  Obama’s policies are actively suppressing re-employment.  Even as the preceding graph implies that there are more jobs available now than at the start of his term, job seekers can only find jobs from an increased amount of availability than was the case before the present policies were in place.  The increase in jobs available just isn’t enough to absorb our high unemployment.

Government Keynesian Waste

As if there’s any more need to demonstrate the fallacy of Keynesian stimulus pseudo-theory after its failure in the ’30s, some empirical evidence from today’s economic dislocation and failed “recovery” is neatly summarized in the following graph from Business Insider:

Most are already familiar with those projection curves, from the 2009 hype associated with ramming the American Recovery and Reinvestment Act of 2009 (the Stimulus Act) through the Democratic and then-economically timorous Congress.  Government standing aside and letting the economy recover on its own was going to let unemployment peak at around 9% and not move below 7% until Dec 2011 or reach “full” employment until Dec 2013.  On the other hand, the Obama Stimulus would cause an almost immediate peak (in August 2009 after a February enactment) at 8% and lead to recovery below 7% unemployment by fall 2010, a year sooner than under non-interference.

Instead, the Obama Stimulus has actively suppressed employment—and so economic recovery.  Unemployment, at roughly 8.5% at the time of stimulus enactment, continued rising unabated to above 10%, and it has remained above the worse-case no-government projection ever since.  Notice further, that actual unemployment has generally followed the shape of the no-government projection curve: the only effect of Obamanomics in this milieu has been to make government involvement worse than no involvement—it hasn’t altered anything else.

Do we have empirical data for the contrary position, that government noninvolvement is actively beneficial?  You betcha.  The Depression of 1920-1921 ran from the start of 1920 through the middle of 1921, and President Warren G Harding’s administration sat it out, with no significant government intervention attempted.  The graph below is constructed from data taken from Table 9 in a paper by none other than Christina Romer.

There are a couple of takeaways here.  One is the sharp, high peak to unemployment and the rapidity with which both the peak and the recovery occurred.  Another is the rapidity with which our economy actually worked its way through this Depression compared to the projected recovery rates in the first graph above.  The projections for our current failing recovery are, compared to hard data, cynically pessimistic.  This pessimism, though, cannot be laid at Democratic Presidential Candidate Obama’s feet; a broad range of economists assumed that slow pace.

In general, to repeat earlier posts and statements made by others: money spent by government is money not available to the private sector or to individuals to spend on their own goals and needs.  Money spent by the government is money that first must be taken from those private enterprises and citizens in the form of taxes today to pay for that spending or greater taxes tomorrow to pay both for that spending and for the interest on the debt incurred by that spending.  And here we’ve seen empirical evidence that government spending, above a minimal level for funding government itself and national defense, isn’t just useless, it’s actively counterproductive—destructive.

A Quibble that Tells the Truth

This is from the White House’s very own blog, from the personal keyboard of Alan Krueger, Chairman of the Council of Economic Advisers:

The household survey showed that the unemployment rate ticked up to 8.3% in July (or, more precisely, the rate rose from 8.217% in June to 8.254% in July).  Acting BLS Commissioner John Galvin noted in his statement that the unemployment rate was “essentially unchanged” from June to July.

And so is our economic recovery “essentially unchanged” from 2009 to 2012.