Employment Stagnation: Bad News for Obama

 

The U. S. Bureau of Labor Statistics reported this morning that, in November, the unemployment rate jumped from 9.6% to 9.8%. And perhaps in anticipation of the bad news, President Obama flew off to Afghanistan to chat over the phone with Hamid Karzai and pose for photo ops with the troops. Back in Washington, Joe Biden was left holding the bag – which, let’s face it, is what he is there for.

Never mind the fact that the figure reported grossly understates the actual number of unemployed – since it excludes those who have given up on the search for jobs. Never mind the fact that it tells us nothing about the underemployed – those who once worked full time and are now relegated to part-time work. In November, we are told, 36,000 people joined the roles of the employed, and they were outnumbered by the young people coming of age and entering the market.

For fun, you should read Peter Whoriskey’s report in The Washington Post. It illustrates nicely what happens when journalists are reduced to flacks.

To his credit, Whoriskey states the facts, and he does not hide the fact that they are disappointing. But this he could hardly do. Non-farm employment went up by 172,000 in October, and for the official unemployment rate to go down to 8% by the first Tuesday in November, 2012 – a date on which folks in Washington are fixated – the job rolls would have to grow by 200,00 a month from now on: which is evidently not going to happen. As things stand, the number of Americans out of work exceeds 15 million.

But after acknowledging the bad news, Whoriskey does what he can to soften the blow. He quotes a fellow from the Brookings Institution who reports that salaries of those employed have increased by 2.3%. “Those are not terrible numbers,” this expert tells. They are “pretty good by post war standards.” And Whoriskey ends his piece with this:

In a post on the White House blog, Austan Goolsbee, chairman of the Council of Economic Advisers, linked the jobs report to the Bush-era tax cuts and unemployment insurance.

“Today’s numbers underscore the importance of extending expiring tax cuts for the middle class and unemployment insurance for those Americans who have lost their jobs. Failure to do this would jeopardize hundreds of thousands of additional jobs, and leave millions of Americans, who are out of work through no fault of their own, on their own.”

Democratic lawmakers have been working to extend unemployment insurance into 2011, but Republicans are demanding spending cuts to offset costs. Without congressional approval, unemployment benefits will run out for 2 million people in December, and several million more will lose them in the coming months.

It seems not to have crossed Whoriskey’s mind of that of his editor that he should call up someone at the American Enterprise Institute, the Heritage Foundation, or the Cato Institute for a comment, and he appears not to have thought it appropriate to consult the Republican leadership in the House or the Senate. It will be interesting to see how The New York Times spins this story tomorrow and on Sunday.

The truth of the matter is that this is very bad news – bad news for the President who is going to be held responsible for the mess he has created, and bad news for the country – which is being made to pay heavily for putting Barack Obama, Nancy Pelosi, and Harry Reid in charge of its economic well-being.

It is not at all clear to me that a genuine, sustained recovery is in the cards anytime soon. There are storm clouds on the horizon.

In Europe, Portugal, Spain, and Italy are likely to follow Greece and Ireland into insolvency, and this could break the German bank. In the US, property values have not hit bottom. They cannot do so until the 1.5 million homes awaiting foreclosure have been dumped on the market. And, of course, there is the problem of the states. Not to put too fine a point on it, Illinois, New York, and California are bankrupt – and there are a great many other states not far behind. Moreover, as I suggested on Sunday, at the federal level, we seem to have entered a fiscal trap. In the absence of economic growth, it is hard to see how we can cope with the debt we have already accumulated. But if there is economic growth – and interest rates go up – we may have trouble servicing that debt. I have trouble believing that, with the help of a bit of financial legerdemain on the part of Tim Geithner, Ben Bernanke, and some of the other folks who lead us into this mess, we can escape a painful reckoning.

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  1. Profile Photo Coolidge
    @Pilgrim
    Kenneth: What happens if the United States defaults on its debts – just clears the ledger? · Dec 3 at 5:35pm

    Outright default is almost inconceivable for a nation with debts denominated in its own currency — the magic of the virtual printing press. With fractional reserve banking a dollar of US debt supports $10-12 of private lending so a default would cascade the US back to a barter economy. After WWII the hugh wartime debt was eliminated, in part, by the extraordinary growth due to pent-up demand, massive capacity, and devastated international competition. Even with the growth, about 40% of the debt was eliminated by monetizing the debt (inflation). Debt now approaches those levels and the prospects for growth are not remotely as bright so we can expect to see inflation rates much higher than post WWII. My mother speaks wistfully of pre-war dates with my father when a movie, followed by hamburgers and malts were less than $1, with bus fare. We will probably shock our unbelieving grandchildren that we could once get a cup of coffee for only $3.47

    • #1
  2. Profile Photo Coolidge
    @Pilgrim

    Oops, looks like Kenneth, Aaron and I jacked the thread. Sorry, Professor Rahe.

    • #2
  3. Profile Photo Member
    @

    Crazy thought exercise: private citizens file for bankruptcy, walk away from debt and come out just fine in seven years. Businesses file for Chapter 11, shed debt, reorganize and get back on the road.

    What happens if the United States defaults on its debts – just clears the ledger?

    • #3
  4. Profile Photo Contributor
    @PaulARahe

    Threads are there for high-jacking. That is the point.

    • #4
  5. Profile Photo Podcaster
    @EJHill
    Paul A. Rahe: Back in Washington, Joe Biden was left holding the bag – which, let’s face it, is what he is there for.

    And it’s not a pretty sight.

    • #5
  6. Profile Photo Coolidge
    @Pseudodionysius

    The thread is not over till the cat lady sings.

    • #6
  7. Profile Photo Member
    @Sisyphus

    Default by the federal government will come when US debt suddenly goes to junk bond status. The Government was very loudly warned by the rating houses a few months back that they were flirting with a drop in rating. The pressure to keep the ratings up is very high, so when it does adjust, look out below.

    • #7
  8. Profile Photo Member
    @Xty

    It is a house of cards and no sleight of hand can fix it. Here Mark Steyn is right – there is no one to hold America’s bag.

    • #8
  9. Profile Photo Inactive
    @ChazzyStar

    “”Today’s numbers underscore the importance of extending expiring tax cuts for the middle class and unemployment insurance for those Americans who have lost their jobs.”

    Can someone answer this question for me? I’ve been hearing for however many years that the Bush tax cuts were only for the rich. By the left acknowledging the extension of middle class tax cuts, aren’t they admitting that the original cuts weren’t just for the rich? Can we all please fly this point up the flag pole?

    • #9
  10. Profile Photo Member
    @AaronMiller
    Kenneth: Crazy thought exercise: private citizens file for bankruptcy, walk away from debt and come out just fine in seven years. Businesses file for Chapter 11, shed debt, reorganize and get back on the road.

    What happens if the United States defaults on its debts – just clears the ledger?

    A normal bankruptcy involves a side that’s broke and a side with money. To my knowledge, the world has never witnessed what’s about to happen: Western nations are all invested in each other, and we’re all going broke.

    The looney American states will only get gradual and hidden bailouts from the sensible ones. It won’t go over well if these debts come due front and center, as an event.

    On a brighter note, I picked a satsuma off my tree today and it was delicious. Facing a dismal economic future is a little easier while enjoying a treat that doesn’t cost money.

    • #10
  11. Profile Photo Member
    @
    Calicocaptive: “”Today’s numbers underscore the importance of extending expiring tax cuts for the middle class and unemployment insurance for those Americans who have lost their jobs.”

    Can someone answer this question for me? I’ve been hearing for however many years that the Bush tax cuts were only for the rich. By the left acknowledging the extension of middle class tax cuts, aren’t they admitting that the original cuts weren’t just for the rich? Can we all please fly this point up the flag pole? · Dec 4 at 7:59am

    The Left doesn’t claim that the Bush tax buts were only for the rich, they whine that the rich got the bulk of the actual dollar reductions.. Of course, the “rich” pay the bulk of the taxes, but that’s something the Left takes as simple social justice.

    • #11

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