The White House is hailing the fact that the economy replaced 272,000 full-time jobs with 432,000 part-time positions, thus reporting a 160,000 gain in total employment for the month. The "economic recovery" has been going on for four years and the stimulus program is even older than that. After four years, Obama's recovery is still not a real recovery, and it does not have traction.
By Louis Woodhill
July 8, 2013
Real Clear Markets
If you Google "White House hails June jobs report," you get 1,930,000 hits.
The White House is hailing the fact that the number of full-time-equivalent (FTE)* jobs in America went down by 56,000 in June? President Obama's merry band is hailing the fact that the economy replaced 272,000 full-time jobs with 432,000 part-time positions, thus eking out the reported 160,000 gain in total employment** for the month?
Presumably, the White House's enthusiasm extends to the 0.5 percentage point increase in the broad "U-6" unemployment rate, to 14.3%. And, the leap of the even broader "SGS Alternate Unemployment Rate" to a new record high of 23.4%. But how about the fact that America moved 169,000 FTE jobs away from full employment in June (to 15.9 million)?
President Obama's so-called "economic recovery" has just turned four, making it old enough to take advantage of the free preschool that he wants the taxpayers to fund. Obama's $862 billion stimulus program is even older. And, at nine months from its conception, Ben Bernanke's baby, QE3, has reached full term. So, let's take a look at how those crazy Keynesian kiddos are doing***.
Commenting on Friday's "Employment Situation" report from the Bureau of Labor Statistics (BLS), Alan Krueger, who is the Chairman of the Council of Economic Advisors, said that Obama's stimulus program, "...helped bring the recession to an end and put us on the path to recovery." Krueger also claimed that the economic recovery was, "...gaining traction..."
Now, of course, if we are, "...on the path to recovery," it means that our economy is not yet actually experiencing recovery. And, if the recovery is "gaining traction," it means that it does not yet actually have traction.
Despite his verbal gymnastics, Krueger could not help admitting the truth. After four years, Obama's economic recovery is not a real recovery, and it does not have traction. It is not truly alive. It is a zombie.
As long as we are on the subject of zombies, let's talk about "stimulus."
When Obama's stimulus program was announced, its authors warned that, without it, unemployment would climb to 9.0%. Not to fear, however. Obama's Keynesian economists predicted that flinging $862 billion of taxpayer money into the gaping maws of various progressive special interest groups would increase "demand," thereby limiting peak unemployment to 7.9%.
Since Obama's stimulus program was enacted, the BLS has fired 51 bullets into this lurching fiscal hulk. Fifty-one monthly unemployment reports have showed that, not only was the stimulus program not working, but also that, if judged by its own lights, it was actually making things worse.
Adjusted to the labor force participation rate assumed by the stimulus program, unemployment peaked at 11.5%, not the promised 7.9%, or even the 9.0% rate that was threatened if the stimulus program did not pass. In June 2013, the adjusted unemployment rate was 10.8%, more than double the promised 5.1%.
While absorbing 51 slugs from the BLS' data gun, Obama's stimulus program was also hit by 17 shotgun blasts from the Bureau of Economic Analysis (BEA), in the form of quarterly GDP reports.
The BEA data show that Obama's stimulus produced the weakest economic recovery in American history. Real GDP (RGDP) growth during the four years since the end of the recession averaged 2.07%. In comparison, during the comparable period following our last severe recession, that of 1981-1982, RGDP grew at an average annual rate of 5.06%.
Despite being riddled with reality bullets, Keynesian stimulus staggers on, glassy eyed, muttering, "I blame Bush." Stimulus is an economic zombie, stalking across the land and striking fear into the hearts of taxpayers, whose blood it craves.
As noted earlier, Obama's economic recovery itself must also be accounted among the undead. It certainly isn't alive in the same sense as America's previous economic recoveries were alive.
During the first four years of Reagan's recovery, the number of FTE jobs increased by 13.07%. For the same period in Obama's recovery, the comparable number was 3.45%.
However, what reveals the true zombie nature of Obama's economic recovery is the fact that, in four years, the FTE jobs that need to be recovered haven't been recovered.
Four years into the Reagan recovery, America had regained all of the FTE jobs that it had lost during the recession, and another 8.8 million besides. As of June 2013, we were still 4.1 million FTE jobs short of our previous employment peak.
The undead have never been known for their athletic prowess, and Obama's economic recovery is no exception. Rather than getting faster with age, Obama's recovery, already the feeblest in American history, is slowing down.
The recovery's fastest 4-quarter RGDP growth rate, a pathetic 2.51%, was registered during its first 12 months. Growth slowed to 1.88% in the second 12 months, picked up to 2.14% in the third, and then slowed again to only 1.75% during the most recent 12-month period.
With economic growth crawling along at under 2.00%, we should not expect any improvement in the jobs situation at all. Obama's zombie recovery has infected America's labor market, turning it into a zombie as well.
When zombies approach, most people flee. And, Americans have been fleeing the job market in droves.
Since George W. Bush left office, labor force participation has declined from 65.8% to 63.5%. This is equivalent to 5.7 million Americans giving up hope on finding paid employment.
Zombies feast on the flesh of the living, and Obama's zombie economic recovery has been making a meal of median family income, which is down by 5.0% since the recovery began. During this time, the median duration of unemployment has declined by a mere 0.1 weeks, to 17.3 weeks. When Bush 43 left office, this measure was only 10.6 weeks.
Turning back to the subject of frightening creatures, if QE3 is Ben Bernanke's baby, its mother's name must be "Rosemary."
We now have experienced three full quarters of QE3. This program, which was intended to boost RGDP growth and employment, has done the exact opposite.
During the nine months before QE3, the Federal Reserve's balance sheet contracted by $122.3 billion, or 4.3%. The Fed was actually doing QT, "quantitative tightening." Despite this, annualized RGDP growth averaged 2.10% and America gained 1.7 million FTE jobs.
During the nine months of QE3, the Fed increased its assets by $686.6 billion, or 24.5%. The results? RGDP growth slowed to 1.31% and the number of FTE jobs increased by only 1.1 million.
Given the results, it is not at all clear why the financial markets seem so attached to QE3. It's time to give this undead little monster a decent burial, stabilize the dollar, and let interest rates be set by the free market.
The Obama/Bernanke economic recovery has become a Keynesian zombie apocalypse. No one is safe. The zombie economy has infected class after class of new college graduates, turning them into pallid husks that live in their parents' basements and play video games all day.
If America is to survive economically, those still possessing free will must take on the zombies in the 2014 and 2016 elections. The Keynesian ghouls can be destroyed with supply-side weapons: deregulation, the FairTax, and a modern gold standard.
We must not lose heart when we hear Obama's Chairman of the Council of Keynesian Zombies "hail" a disastrous BLS report. We can and must win our "Economic World War Z."
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