With Jobs Stagnant, Obama Tries To Change The Subject
Employment is a lagging indicator of the state of the economy. So, it is not
surprising that, after real GDP (RGDP) growth went into reverse in 1Q2014 (by
contracting at a 1% annualized rate), we have seen a significant deterioration
in the labor market during 2Q2014.
While America added 379,000 full-time-equivalent* (FTE) jobs per month during 1Q2014, the monthly gain for the first two months of 2Q2014 has averaged only 94,000. At this rate, getting back to full employment would take somewhat longer than forever, because our working-age population is growing by about 180,000 each month. Indeed, we moved 9,000 jobs farther away from full employment during May.
At the end of this month (June), President Obama’s economic recovery will be 5 years old. That’s too old for his proposed taxpayer-funded universal pre-kindergarten program. Unfortunately, as economic recoveries go, this little kindergartner belongs in Special Ed.
Although the BLS non-farm payroll numbers finally surpassed their pre-recession high in May, the BLS Household Survey showed last month’s total employment to be 459,000 jobs shy of the November 2007 peak. And, because so many of the jobs created during Obama’s so-called “economic recovery” have been part-time positions, FTE employment is still 1.5 million below the level reached 77 months ago. Meanwhile, our working-age population has grown by 14.5 million since then.
It makes perfect sense that total FTE employment
would be lower today than it was 6.5 years ago. Since 4Q2007, annualized RGDP
growth has averaged less than 1%. America can grow at that rate while employing
fewer workers—and that’s exactly what it has done.
Of course, between November 2007 and June 2009, we had the worst economic downturn since the Great Depression. RGDP fell by 4.26%, and the nation lost 6.05% of its FTE jobs. However, our jobs problem today isn’t so much the result of the 2007 – 2009 recession, as it is the product of the slowest economic recovery in American history.
Deep recessions are supposed to be followed by sharp recoveries. This one wasn’t. Since 2Q2009, RGDP growth has averaged only 2.18%, which was not enough, over the span of almost five years, to recover all of the FTE jobs lost during the recession. Indeed, because of population growth, America moved 6.6 million jobs farther away from full employment since the recovery began.
It’s clear that President Obama has given up on the economy, and has moved on to other priorities. Obama is a Keynesian, and Keynesians believe in “stimulus.” When that doesn’t work (and, it never works), all Keynesians can do is to try to change the subject.
Obama’s economic recovery set the world’s record for failed Keynesian stimulus, with a combined $5.4 trillion of fiscal stimulus and $2.2 trillion of monetary stimulus applied (through 1Q2014) in order to produce $1.7 trillion of additional annualized GDP. Uh, where is that “multiplier” that Keynesians like to talk about?
Americans have adapted to the stagnant Obama/Bernanke/Yellen economy by dropping out of the labor force. Labor force participation in May continued to bump along at the 36-year-low level of 62.8%, which it first reached last December. Against the record high labor force participation rate of 67.33% reached during the Clinton boom, this amounts to 11.1 million Americans giving up on the world of work.
It hasn’t been the aging of the population that has caused the drop in labor force participation. The employment rate of Americans 55 and older has actually gone up by 0.5 percentage points since 2007. The problem is that labor force participation by people in their prime working years (25 – 54) has gone down, and participation by young people (16 – 24) has gone down by even more.
So, Americans have been exiting the labor force. Where have they been going? They have been fleeing into the arms of the welfare state.
Since 2007, 2 million more Americans have started receiving Social Security disability payments, and the SNAP (food stamps) roles have increased by 20 million. Ominously, a significant portion of the $600 billion of additional federal student loans taken down since 2007 was used to pay current living expenses, rather than to acquire marketable skills.
Unfortunately, the way that President Obama is choosing to change the subject this time around is to launch a new attack on the economy, in the form of EPA limits on CO2 emissions. Obama plans to sacrifice the jobs of real people (and drive up their utility bills) for the sake of making a symbolic gesture regarding “climate change.” The Chinese must be laughing at us right now, even as they commission one new coal-fired power plant every week.
The global warming crowd’s own models show that the warming that they fear would not be prevented by any feasible reduction in global CO2 emissions. Even if climate change is, in fact, a major threat, the best path forward would be to grow our economy as fast as possible, and let private companies advance technology (of all kinds) as fast as possible. This would increase overall wealth, and it is wealth that makes societies resilient to stress of all kinds, and better able to finance coping with it.
If there is any role for government at all with respect to “climate change” (in quotes, because the climate has been changing continuously since the earth was formed), it is to finance research into geoengineering solutions, like blasting fine particles into the upper atmosphere to reflect sunlight back into space. If global warming is, in fact, a serious problem, geoengineering is the only way that we are going to be able to deal with it. The laws of thermodynamics will not be impressed by symbolic gestures.
Right now, America needs pro-growth economic policies to advance RGDP, jobs, and incomes, not a quixotic tilt at the climate change windmill.
While America added 379,000 full-time-equivalent* (FTE) jobs per month during 1Q2014, the monthly gain for the first two months of 2Q2014 has averaged only 94,000. At this rate, getting back to full employment would take somewhat longer than forever, because our working-age population is growing by about 180,000 each month. Indeed, we moved 9,000 jobs farther away from full employment during May.
At the end of this month (June), President Obama’s economic recovery will be 5 years old. That’s too old for his proposed taxpayer-funded universal pre-kindergarten program. Unfortunately, as economic recoveries go, this little kindergartner belongs in Special Ed.
Although the BLS non-farm payroll numbers finally surpassed their pre-recession high in May, the BLS Household Survey showed last month’s total employment to be 459,000 jobs shy of the November 2007 peak. And, because so many of the jobs created during Obama’s so-called “economic recovery” have been part-time positions, FTE employment is still 1.5 million below the level reached 77 months ago. Meanwhile, our working-age population has grown by 14.5 million since then.
Of course, between November 2007 and June 2009, we had the worst economic downturn since the Great Depression. RGDP fell by 4.26%, and the nation lost 6.05% of its FTE jobs. However, our jobs problem today isn’t so much the result of the 2007 – 2009 recession, as it is the product of the slowest economic recovery in American history.
Deep recessions are supposed to be followed by sharp recoveries. This one wasn’t. Since 2Q2009, RGDP growth has averaged only 2.18%, which was not enough, over the span of almost five years, to recover all of the FTE jobs lost during the recession. Indeed, because of population growth, America moved 6.6 million jobs farther away from full employment since the recovery began.
It’s clear that President Obama has given up on the economy, and has moved on to other priorities. Obama is a Keynesian, and Keynesians believe in “stimulus.” When that doesn’t work (and, it never works), all Keynesians can do is to try to change the subject.
Obama’s economic recovery set the world’s record for failed Keynesian stimulus, with a combined $5.4 trillion of fiscal stimulus and $2.2 trillion of monetary stimulus applied (through 1Q2014) in order to produce $1.7 trillion of additional annualized GDP. Uh, where is that “multiplier” that Keynesians like to talk about?
Americans have adapted to the stagnant Obama/Bernanke/Yellen economy by dropping out of the labor force. Labor force participation in May continued to bump along at the 36-year-low level of 62.8%, which it first reached last December. Against the record high labor force participation rate of 67.33% reached during the Clinton boom, this amounts to 11.1 million Americans giving up on the world of work.
It hasn’t been the aging of the population that has caused the drop in labor force participation. The employment rate of Americans 55 and older has actually gone up by 0.5 percentage points since 2007. The problem is that labor force participation by people in their prime working years (25 – 54) has gone down, and participation by young people (16 – 24) has gone down by even more.
So, Americans have been exiting the labor force. Where have they been going? They have been fleeing into the arms of the welfare state.
Since 2007, 2 million more Americans have started receiving Social Security disability payments, and the SNAP (food stamps) roles have increased by 20 million. Ominously, a significant portion of the $600 billion of additional federal student loans taken down since 2007 was used to pay current living expenses, rather than to acquire marketable skills.
Unfortunately, the way that President Obama is choosing to change the subject this time around is to launch a new attack on the economy, in the form of EPA limits on CO2 emissions. Obama plans to sacrifice the jobs of real people (and drive up their utility bills) for the sake of making a symbolic gesture regarding “climate change.” The Chinese must be laughing at us right now, even as they commission one new coal-fired power plant every week.
The global warming crowd’s own models show that the warming that they fear would not be prevented by any feasible reduction in global CO2 emissions. Even if climate change is, in fact, a major threat, the best path forward would be to grow our economy as fast as possible, and let private companies advance technology (of all kinds) as fast as possible. This would increase overall wealth, and it is wealth that makes societies resilient to stress of all kinds, and better able to finance coping with it.
If there is any role for government at all with respect to “climate change” (in quotes, because the climate has been changing continuously since the earth was formed), it is to finance research into geoengineering solutions, like blasting fine particles into the upper atmosphere to reflect sunlight back into space. If global warming is, in fact, a serious problem, geoengineering is the only way that we are going to be able to deal with it. The laws of thermodynamics will not be impressed by symbolic gestures.
Right now, America needs pro-growth economic policies to advance RGDP, jobs, and incomes, not a quixotic tilt at the climate change windmill.
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