Many critics of President Obama’s speech on Thursday night called it flat and listless. Yet those same adjectives were insufficient to convey the reality of the jobs numbers released on Friday, a day after the Democrat convention ended. A far more accurate description of those numbers would be disastrous: non-farm payrolls increased by a measly 96,000 jobs, well below even the bleakest estimates, and well below the 125,000-150,000 jobs necessary just to keep pace with the population growth of job-eliglible Americans. The nation has now endured 43 months of unemployment officially above 8 percent.
The details paint an even bleaker picture. No doubt many of the media outlets determined to get this president re-elected will tout the fact that the unemployment rate dropped from 8.3 percent to 8.1 percent, even as they bury the reason why: 368,000 Americans simply gave up looking for work. That exodus dropped the labor force participation rate to 63.5 percent, a 31-year low. For perspective’s sake, if the number of people in labor force had remained the same as last month, the unemployment rate would be 8.4 percent. If the labor force were as large as it was when Obama took office in 2009, the unemployment rate would be a staggering 11.2 percent.
Yet it gets even worse. The previous two month’s jobs totals were “revised.” 41,000 jobs were lopped off the totals for June and July, as reality caught up with the Bureau of Labor Statistics’ (BLS) overly optimistic “guesstimates.” In early August, the New York Post’s John Crudele noted that the BLS’s “birth-death” model had added 52,000 “phantom” jobs to their totals in July, (a month the BLS traditionally subtracts jobs from its totals), for the first time in three years. He revealed that 18,000 jobs had been subtracted in July 2010, and 38,000 in July 2011. The BLS even subtracted 57,000 jobs in July 2007, when the economy “was still booming,” as Crudele put it.
Crudele attributed July’s “remarkable discrepancy” to election year politics. And while one can debate the merits of his conclusions, there is something far more important to take away from what has actually occurred: Friday’s jobs numbers will also be revised in the future–and the likelihood is that they too will be lowered.
The slowest recovery since the Great Depression has produced other consequences as well. The average period of unemployment is 40 weeks. More than five million Americans, representing 40.7 percent of the people counted as unemployed, have been out of work for 27 weeks or longer. And when one gets past the “official” unemployment rate and examines the BLS’s U-6 number–representing Americans who have been out of work for six months, along with those who are involuntarily part-time workers, due to cutbacks in their days or hours–the under-employment rate has held steady for months at around 15 percent of the workforce. Add those who have given up looking for work and that number jumps to 19 percent.
Americans have reacted in a number of different ways to this grim reality. 15 percent of Americans receive food stamps, an all-time high. A record number of Americans are now receiving federal disability checks, with more than 11 million Americans currently enrolled in the program–5.4 million of whom signed up since Obama took office. Even more incredibly, the number of new enrollees is twice the number of people who have gotten jobs since the recession officially ended in June of 2009. The number of people 55 years of age and older who have jobs has increased by 3.9 million, even as total employment is down by 5 million, because many Baby Boomers can no longer afford to retire. Younger Americans are blocked from getting a job as a result, and even when those younger Americans find a job, 40 percent of those jobs are in low-paying categories, such as waiting on tables, bar tending, or working in stores.
In other words, the president’s Keynesian-inspired, prime-the-pump with massive deficit spending strategy has been a complete failure. Ironically, it is precisely hopes of continuing such an ill-advised strategy that keeps the stock market pumped up. Thursday represented a prime example of Wall Street’s addiction to “monetary stimulus,” aka the Federal Reserve’s strategy of buying up America’s $16 trillion of debt–with more debt. As the Financial Times put it so bluntly, “Barack Obama’s chances of re-election as US president rose on Thursday and the words that did it were not his but Mario Draghi’s.” They were referring to the fact that the president of the European Central Bank (ECB) had come up with his own version of Quantitative Easing, promising to “buy the bonds of troubled European countries.”
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