Myth of a ‘Recovery’: What the Numbers Really Say
by Charles C. JohnsonLast night, at the State of the Union address, President Obama spoke of a recovery, but the evidence for such a recovery doesn’t really exist.
The national unemployment is now 8.5% (December’s), its lowest level since January 2009, but while some saw this welcome news as something to celebrate, it hides a much darker economic picture: the jobs report vastly undercounts the unemployment rate. Moreover, as of this writing, we don’t know if December’s jobs report is a trend, or if, as some economists predict, economic growth will slow in the first quarter of 2012, forestalling some of the gains made. In November, the unemployment rate fell from 9% to 8.6%, but this was not due to an increase in jobs, but due to a decrease in the numbers of people “actively seeking” them. “The 315,000 who dropped out of the labor market exceeded the 120,000 new jobs,” notes Edward Luce, former speechwriter to then Treasury Secretary and Obama economic advisor Larry Summers in The Financial Times. “If the same number of people were looking for work today as in 2007, the jobless rate would be 11%.” In December 2007, the U.S. economy employed 146 million; today, four years later, it employs 140 million. The population has grown; the number of jobs has declined.
Part of the problem is the structure of our economy. To describe our rut economist Tyler Cowen titles his book, The Great Stagnation. Peter Thiel, PayPal founder and billionaire Facebook investor, calls it, “The End of the Future.” The past’s optimism is foundering on the rocks of our very rocky economic recovery. The economy is shifting in ways we can’t begin to understand. Nobel Prize-winning economist Michael Spence and co-author Sandile Hlatshwayo estimate that from 1990 to 2008 all net job creation has been in the “non-tradable sector,” chief among them health care and government jobs. Alas these sectors aren’t known for their productivity and are hardly the jobs that can propel the growth necessary to accommodate a new workforce. The manufacturing jobs which once went to the growing middle class is getting more productive—but with fewer workers and more machines. In 2009—the height of the recession—productivity in U.S manufacturing increased by 7.7%, more than any other country followed by the Bureau of Labor. America’s share of world manufacturing stood at 20% in 2009, down only 2%.
If America is to beat this recession, it will need new firms, churning out new jobs. Indeed, according to the Kauffman Foundation, America’s leading funder of economic research, since 1980 nearly all net job creation has come from firms that are less than five years old. But since 2007, new firm formation has slowed. The number of new companies formed in 2009 is 27% lower than past years, meaning that companies formed in 2009 employ one million fewer workers than the historic norm.
President Obama has done nothing to change that picture, and indeed, he has made it worse. He has increased regulations on businesses and canceled the Keystone pipeline. He is doing seemingly everything he can to make government the sole employer.
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38 Comments
If this is what recovery looks like I would hate to see what collapse looks like. Unless we get the Marxist-in-Chief out of the WH in November we'll all get a good hard look at it sooner rather than later.
Where was Joe Wilson when we needed him last night…….?
BOB will use any statistical tool at his disposal to get the unemployment rate down to zero by the election. Even if he has to say the country only has 10 jobs and they are all filled. Everyone else will be classified as "not looking." What a freakin system of lies…
My thought, too.
Watch for the manipulation of the numbers, especially in the July-October timeframe. Of course, we won't be able to prove the manipulation until after the election, but I don't think it will matter. The O is a year away from being the former president.
Just playing with the numbers, as usual.
How many people took unemployment until they were eligible for Social Security and have officially dropped out of the workforce? Don't forget masses of boomers are retiring. The question is are they being replaced? Are these really new jobs?
What really gripes my ass is both parties speak of 'those people who have given up on looking for work'. The truth is, their unemployment insurance may have expired, but they are still looking.
One of Obama's "best" lines that resonated with the Dems last night,…..
was when he said he would oppose anyone,….
who would return us to those failed policies,….
that created this mess.
He, Pelosi and most Libs have repeatedly used this line, but at no time,……..
has any of these people told us just what,…..
those failed policies were……???????
And more important, why, oh why haven't,…..
any Republicans, Limbaughs, Krauthammers, presidential candidates,…….
shed some light on just what failed policies they are talking about….?????
Without any evidence, you make this statement, please use a dictionary and look up the word Marxist.
Hopefully, under a rock.
Unless you elect Ron Paul you will see no difference just like we so no difference between Bush and Obama. All CFR candidates will be the same. All "Free Trade" supporters will be the same.
all i know is i am seeing the same sort of thing i was seeing in 2008. it seems the money is running out everywhere again. it does not seem like anything has recovered.
People who speak of a recovery all seem to think it will just happen by magic. The dismantling of this country continues and that would have to be REVERSED for things to get better. Anyone speaking of "Free Trade" will likely make things worse. This is deliberate.
Go figure. Chris Dodd is lying about job creation too. Old habits die hard.
http://www.techdirt.com/articles/20120124/0434481...
What recovery? If one considers the folks off the rolls, the underemployed, and the first timers looking for work, the real unemployment rate is more like 20%.
http://pjmedia.com/spengler/2012/01/24/obama-is-t...
I know people that have given up. I also know people that rode the unemployment train for 99 weeks then jumped on the free tuition and aid to go to school. How do you count them?
With energy prices on the rise, the recovery is a myth! The money taken out of people's pockets to get to work or to warm their house, is all money that could be spent on other products thereby boosting the economy. Obama rants about oil company profits, which average around 5 cents a gallon, but fails to mention gas tax which averages 15 cents per gallon! Who is more greedy?
"Marxism: the political, economic, and social principles and policies advocated by Marx; especially a theory and practice of socialism including the labor theory of value, dialectical materialism, the class struggle, and dictatorship of the proletariat until the establishment of a classless society."
Of course no Marxist society has ever gotten past the Dictatorship of the Worker and established a classless society because dictators don't like to give up power. Marxism will never produce a George Washinton.
When you refuse to value personal responsibility then you have a society of children. Like those roaming around in the OWS rat infested shanty towns.
It's shocking that DC bureaucrats would fudge the numbers, isn't it? These people VOLUNTARILY live in the Metro area and VOLUNTARILY work for Uncle Sam, crawling along the Beltway at 14 mph in their hybrid vehicles after leaving their 800 sq ft apartments with $2500/mo rent. But hey, there's job security and diversity in the workplace dontcha know. Hmmmm…I wonder which way they vote? All this talk of the Bureau of Labor Stats being nonpartisan is right up there with the Tooth Fairy for believability.
If they provide a definition they will not be able to complain about them. Everyone will realize that it's the same policies that are currently in place.
Keynesian economic results are the same regardless of the party in charge. Bush was a closet progressive. The only difference between Bush and OBlamer is the closet. Simply put, no entity can continue to consume more than it produces. It will eventually die off.
When the Democrats took over Congress in January 2007, unemployment was 4.4 percent. It is now 8.6 percent. The budget deficit created by the outgoing Republican Congress was only $161 billion. It is now $1.7 trillion. The total outstanding debt in January 2007 was $8.7 trillion. It is now $14.6 trillion. Before the Democrats took control of everything, America's credit rating was AAA. It is now AA+.
The ‘Community Re-Investment Act’ was used by democrats to pressure banks to give home loans to unqualified borrowers. This created so much uncollectable debt that Freddie and Fannie were created to try to cushion the bad debt load on the economy. Although repeatedly warned of impending collapse by McCain, Bush, and many others, Frank and Dodd simply refused to allow any attempts to prevent the recession.
The unemployment rate when Obama was elected was 6.8%; today it is 8.5% … and that is not considering the fact that 3 million fewer Americans are seeking work compared to 2007.
There are now fewer payroll jobs than there were in 2000 and now, 40% of those jobs are considered “low paying.”
Regular gasoline per gallon cost $1.68 in January 2009. Today, it’s $3.39 — that’s a 102% increase in just three years.
Electricity bills have also skyrocketed, with households now paying a record $1,420 annually on average, up some $300.
Since December 2008, food-stamp use has increased 46%. Nearly 20% of males age 25 to 34 now live with their parents.
America’s annual budget has jumped to $3.8 trillion — and yet the United States brings in only about $2.1 trillion in revenue.
America’s total public debt stands at $15.23 trillion; in January 2009, the debt was $10.62 trillion.
Obama is on pace to borrow $6.2 trillion in just one term — more debt than was amassed by all presidents from Washington through Bill Clinton combined.
The debt is rising by $4.2 billion every day — $175 million per hour, nearly $3 million per minute.
After reading your post, industrial strength stupid comes to mind. Get your head out of your butt. He ain't a god, he is an idiot. Yeah Obama is an idiot.
You know people like that? Do you hang out with them, or what? It begs the question (g), I do not know how to count them and neither does the government. That is the point.
Oil, corn, wheat, cotton, copper, steel, aluminum, gold, silver – what do they all have in common? Their prices have all doubled under Obama's free money Fed. It's a trillion dollar a year tax. Perhaps starting a new manufacturing business is a little risky with such instability in the commodity markets.
Good article, however quoting a Nobel Prize winner has lost it's luster ever since bozObama was mistakenly given one strictly based on a 'token gesture'.
We need to update the US Debt Clock
It seems to be reading that the "Actual Unemployed" is exactly 23,249,406 with a total population of 312,907,781 and a total of 112,922,350 "Income Tax Payers"
So 8% of our total population is unemployed or 17% of total workers are, but according to our government both numbers are false.
Someone from Obama's Administration needs to talk to the Durst Organization & shut this down for being wrong
The GOP candidates need to take some time off from eviscerating each other as being too tepid or too grandiose, and spend some significant portion of the next so-called debate listing Obama's utter failures in policy which are leading to our collapse. Newt needs to stop going after the media and crush this SOTU for the big-government mess it is. Mitt needs to stop soft-pedaling Obama's rhetoric by suggesting he is "in over his head" and call out O's bald-faced lies. One-by-one, list Obama's promises and subsequent policy moves, and highlight how each one is destroying the economy. This would have far more impact than going after the moderator for inappropriate questioning–however satisfying that might be, temporarily.
Some scary charts of the unrecovery.
Thank you. This place comes up with a story yesterday suggesting Buffet's rail system may get what Keystone doesn't. That's plausible. And, yet, we have people around here throwing out "Marxism". No, It's Cronyism.
Zero Hedge and Ron Paul, for instance, wouldn't be on the same page. Besides the fact that "financial" recessions have historically had slower rebounds, the Zero Hedge graph showing household leverage staying flat is showing something the author suggests is bad. Those more critical of debt (Paul) would disagree. Zero Hedge is close to Wall Street, in my view. Lending is an enourmous money machine, for not just lenders but also those benefitting from what they buy. It stimulates the economy, but has gone past the point where it has done it on borrowed time. The deficit/GDP graph shows this best, and is the graph more Americans need to appreciate if we are ever to get out of an even bigger mess.
If, for years, we borrowed 40% of what we spent at home, what do we think would eventually happen in our personal lives? The sky is the same color in the federal world. To reduce spending and borrow less, will not put more money in people's pockets, but it will slow growth. This is the problem with Greece. We need to begin getting used to the fact that the correct path is one where growth isn't debt-induced. Paul is the only one willing to take the heat for this reality, because it is sure to begin a stream of one-term presidents, and the other power-seekers don't want any of that.
A myth and nobody has seen it. It has become the Big foot of our time! Propaganda most definitely!
As the dollar goes down in value commodity prices rise, and vise versa. All commodities are traded in U.S. dollars, because we have the worlds reserve currency for now. If you observe both you will see how this operates.
I've never gotten the feeling that Zero Hedge advocates debt or excessive lending. Just the opposite. They consistently point out that the illusion of prosperity we've experienced over the past 40 years or so has been debt-based, and that, as a result, true growth hasn't actually taken place. I think the household leverage chart is meant more as an example of how this recession is different due to the steep drop in housing prices. People won't feel comfortable borrowing money for a long time unless housing prices go up, but housing prices will only go up if they're artificially manipulated higher — just as they were in the run-up to the bust.
It's a vicious cycle, and the closer you look, the more you begin to realize the cycle is controlled by banks and governments working in tandem.
As to your second point, you're absolutely correct. What needs to happen in this country (and the rest of the world) would be politically unpopular. How many politicians want to stand up in front of the country and tell everyone the truth? "We've spent far too much, and now we have to cut back on everything and pay the bills. Everyone will hurt for a while, and it won't be fun. You won't be able to have all the things your parents had." No politician is going to do that, which is why Obama's speech last night was full of rainbows and unicorns. That's what people want to hear, and it's what wins elections. Unfortunately, it's also what's gotten us into this situation.
Debt-fueled "growth" isn't sustainable, and we'll learn that the hard way if we don't change how we live.
We always see an increase of jobs between October and December because retailers and other companies hire temporary workers for the Holiday Season. After the Holidays, those job numbers go back down. We also see higher unemployment during the winter months due to having jobs that are seasonal and many do not work through the winter months. We all know that they cook the numbers so they look better by conveniently leaving out those who are still unemployed and are no longer getting unemployment, or those who have given up looking for jobs.
Recovery? Please, all these politicians are for the birds. I went to the doctor and he told me that my left arm is longer than the other one. Tried to go to the Sizzler for lunch and it was closed. The other day I was walking my dog and my neighbor barely even said hey to me. Now, I get up in the morning, ask my wife about coffee and she says she didn't make any. If this is a recovery, I don't know what is. Four more years of this and we'll all be doing it. That's just math! Think about that when you think about America, and then you'll be the patriotic thing.
All anyone has to do is check out what's going on around them. Many of us are SEVERELY underemployed. I don't feel any recovery at all.
Example: Monster.com used to have about 8+ pages of job openings for attorneys in L.A. County. Now there are 2 pages. Add to that that there is a glut of attorneys in my state which makes it even harder to find a job unless you went to a top 10 school or know someone (and even then there is no guarantee if there is no work or very little work that would justify hiring someone on to help you do it).
I can't feel the recovery any more, and I always have been able to until things changed. I still feel it sometimes. Its exactly like you say. I agree with what you say. I'm with you, unemployment is nothing to not take it seriously enough. I hate people who are insevere. Say what you MEAN.
It was probably all part of Obama's plan. Monster.com needs to hire more people to write those pages so they can get it back like it used to. And totally, I mean, I know LOTS of people and none of them have done a single thing to give me a job. I didn't go to all 10 schools, but I went to 5 or 6 though.
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