Since the media has spent the last six years ignoring the decline of the American workforce, and writing comically lunkheaded propaganda stories about how the unemployment picture “improved” when it was actually people giving up altogether and dropping out of the game, it seems appropriate to switch gears and applaud the small signs of life in the workforce from the July report. The mainstream headlines were a bit dour, because the topline unemployment rate edged up to 6.2 percent, but that was partly due to some long-term unemployed filling out job applications for the first time in a year. They couldn’t find work, which is why the U-3 rate went up, but it is good news that they’re trying.
There’s a very good reason they’re trying, and it has absolutely nothing to do with some mythical “recovery” finally chugging to life as Obamanomics suddenly starts working, after six years of failure and trillions of dollars spent. It’s because extended unemployment benefits were not renewed. The employment crisis is a matter of both job supply and demand; it matters that a large number of the long-term unemployed were motivated to begin looking for work again. If the economy can’t supply the jobs they need, we’ve still got big problems.
A sober look at the July unemployment report doesn’t bring a lot of confidence about an employment surge. July job creation was a very hefty drop from the June numbers, not a trend line of steady improvement. June’s revised job creation stood at 288,000 jobs, while July came in at just 209,000, well below the 230,000 anticipated in projections. On the bright side, July wasn’t anywhere near as horrible for losing full-time jobs and picking up part-time jobs. On the down side, a sizable portion of the jobs created in July were government jobs. Also, as a post at Zero Hedge notes, there’s a severe demographic problem in the current job creation model, which leaves younger workers facing brutal levels of unemployment in a generational crisis.
Louis Woodhill at Forbes has a nice capsule summary of the latest economic news:
July was a better month for jobs than June, but it wasn???t great. The number of full-time-equivalent* (FTE) jobs increased by 257,000, after declining by 151,000 in June. More significantly, the nation recovered during July about half of the ground that it lost with respect to full employment during June. Still, at July???s pace, it would take 9.5 years to get America back to full employment.
Declining labor force participation (LFP) was the big (and, for a time, untold) story of the Obama recovery. Interestingly enough, LFP bottomed out at 62.79% in December, which is when Congress refused to renew extended unemployment benefits. By July, LFP had recovered to 62.91%, which is still down by 2.74 percentage points from the start of the recovery. This is equivalent to 6.8 million Americans giving up on being self-supporting via work.
In terms of jobs, there has really been no economic recovery at all. Five years down the road, FTE employment is still 1.4 million lower than it was in November 2007. In the meantime, our adult population has increased by 14.9 million.
There was great excitement over the GDP report issued by the Bureau of Economic Analysis (BEA) on July 30, which showed that 2Q2014 real GDP (RGDP) increased at an annualized rate of 3.89%. Before anyone gets carried away, it should be noted that this only served to bring the RGDP growth rate for the first half of 2014 up to an anemic 0.88%.
But shouldn???t this reading give us hope that ???Recovery Summer??? (originally proclaimed by Joe Biden in 2010) has finally arrived? Not necessarily. RGDP growth hit 4.51% in 4Q2011 and 4.44% in 3Q2013, but then fell to earth again. Despite six quarters with 3%+ growth since mid-2009, RGDP growth has averaged only a pathetic 2.17% for the five years of the recovery to date.
From there, Woodhill goes into a lengthy deconstruction of Keynesian economics, which could be summarized as follows: Obama spent more money and racked up more debt than any President before him, and brought us the weakest recovery in history. That’s a very difficult criticism for Obama’s defenders to refute, although they do try, mostly by making phantasmagorical claims about the economic apocalypse we would have faced without Obama’s trillion-dollar stimulus and other big-spending measures.
Is there anyone who really thinks those doomsday claims are plausible – that without budget-busting stimulus plans and money printing over at the Federal Reserve, we’d have been doomed to something at least as bad as the Great Depression? How does anyone make such a claim with a straight face, especially if they have the most cursory knowledge about what actually happened to Obama’s stimulus billions? How much interest are taxpayers going to pay on Obama’s debt, and how much better would be we doing if that money was in private hands, ready to be invested… assuming, of course, the regulatory state could be pared back enough to make investment attractive?
Bottom line: when our economy is enjoying the kind of recovery it really needs, you won’t need a magnifying glass to see it, and it won’t be fragile enough to shatter at the first hint of domestic or overseas financial crisis. If what we’re seeing now is the best we can expect during the high points between the inevitable economic downturns, we’re in deep trouble.