The Other 10.4 Million Jobs

The President has taken to bragging about the 3.7 million new jobs that have been "created" on his watch, but he conveniently has forgotten to mention that he's still 10.4 million jobs short of getting America back to anything resembling a normal working economy.

For more than three years, the President has blamed his predecessor for the mess that he (Obama) "inherited." These are tired excuses, especially coming from a man who promised that his policies would not only fix the economy but would actually slow the rise of the oceans and "heal" the planet. Obama's finger pointing also ignores the fact that the economy he "inherited" in January 2009 was one given to him from a Democrat controlled House and Senate.

When his party took control of the House and Senate following the 2006 elections, the unemployment was 4.4%. Low unemployment vanished along with the cherry blossoms the next spring; the following year it became a national crisis. So, to the extent that President Obama inherited a bad economy, he inherited it from a Democratic majority in Congress; an economy his party drove into the ground; an economy President Obama essentially inherited from Senator Obama.

Given these realities, it is easy to see how President Obama could both fail to diagnose the cause and extent of the problem, and would be oblivious to see how his proposed "fix" would only serve to prolong and worsen the pain.

Earlier this month an almost jubilant Barack Obama said "the economy is getting stronger, and the recovery is speeding up." Relative to the economic funk that we've been in for three and a half years, there is some truth to what he said. But, what he didn't say is "compared to what?" Nor, did the President expound on the extent of the damage and suffering inflicted on every American household – much of it from which many families and the nation may never fully recover.

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For sure, the Labor Department's January report of 227,000 new jobs was encouraging news and it followed good – but not great - new job reports for the two previous months. The President also bragged to a group of business leaders that 3.7 million jobs had been created on his watch.

But, unlike the late Paul Harvey, Barack Obama selectively fails to mention "the rest of the story."

It is really just simple arithmetic. Of the many statistics that the Labor Department collects is the total size of the age eligible workforce population. For February 2012 the population stood at 242.435 million.

The department also tracks the Labor Force Participation Rate (LPR) which measures the number of people employed or actively looking for work. The LPR for February 2012 was 63.9%. The average LPR from January 1990 through December 2008 was 66.53%, which can be considered "normal" for the modern-era American workforce population that includes an ever increasing number of women working outside of the home. In other words, almost exactly 2 of every 3 eligible people were either employed or looking for work.

The Congressional Budget Office and most economists consider a "normal" unemployment rate to be 5.4%. For the most recent 37 months, however, unemployment as measured by the Labor Department has been between 8.3 and 10.0 percent.

Simple arithmetic exposes the enormity of the jobs challenge facing America, the President and Congress:

However, the current Total Employment Level is only 142.065 million according to the Labor Department's latest report. That means America is still 10.391 million jobs short of "normal."

There's a lot more troubling news about the economy, jobs and the perils of every family that the President conveniently fails to mention in his frequent stump speeches, too. In what the New York Times called a "bleak forecast," the Federal Reserve recently revised downward economic growth projections for 2012 by nearly a full percent of GDP to between 2.5% to 2.9%. The CBO likewise estimates long term tough times ahead; only a 2.0% GDP for the current year, but falling to just 1.1% in 2013. Unemployment is expected to remain dangerously high for years, as well. The CBO projects an increase to 8.9% unemployment by the end of the current year, rising again in 2013 to 9.2%, and remaining above 7% until at least 2015.

A new IBD/TIPP poll found that 23.1% of all households have at least one member currently looking for work, up from 22.2% last month. That translates to a staggering 30 million people – far more than twice the number that the Labor Department's formula defines as "unemployed," and trending the wrong way.

On Obama's watch more than $4.5 trillion has been added to the federal debt; more than a 40% increase in only three years, which now exceeds total GDP. Only six other developed nations in the world have debt larger than their economy – Greece, Ireland, Iceland, Italy, Japan, and Portugal; dubious company for the United States of America as the first three have required bailouts and the other three are in serious trouble.

Every household in America bears the burden of the enormous financing cost of the $15.5 trillion of federal debt, not to mention that the principal balance needs to be repaid one day, too – just like the home mortgage, a car loan, and credit cards. For the 115 million households in America, the share of the current debt is $135,650 – at least as large as a great many mortgages. Every additional $1.3 trillion of debt – which is expected again this year – increases the household federal debt burden by $11,300.

Speaking of households, gas prices are now $2.00 higher per gallon than when Obama took office – a 108% increase. According to the Federal Highway Administration, the increased prices at the pump cost the average driver (13,476 miles per year) an extra $1,350 per year compared to prices just 36 months ago. If you have two or more drivers in your family, or do more than an average amount of driving, you're really getting hit.

The Labor Department reports that workers earnings continue to decline in terms of constant adjusted dollars. But, while workers purchasing power declines, along with the price of gas skyrocketing, the family food cost increased 4.8% and family health insurance premiums were up 9% in the last year. Both are expected to continue to increase in 2012.

Tens of thousands of home owners have lost their largest personal asset during this crisis, and the ones that still own their home have on average seen its value decline by 33% since the 2006 market peak. Worse, the market is still trying to find a bottom. Home prices in 2011 declined in 337 of 384 metro areas tracked by FiServ Case-Shiller. The housing industry "remains depressed" according to Federal Reserve analysts and further erosion in value is forecast for2012. "We've seen home prices take a turn for the worse…and we do think that there is more downside from here," according to Ellen Zentner, a senior industry economist. "If you get stronger jobs and wage growth, it'll go far in alleviating some of the pipeline foreclosures that have yet to happen," she added.

In fairness Obama can't be blamed for all of the problems that created the current economic mess, but he did say he knew how to fix it. He's the one who said he would have unemployment under 6.0% by now and down to 5.4% by Labor Day. See his graph below created in January 2009 to sell the Congress on the Stimulus Plan.

Source: The Job Impact of the American Recovery and Reinvestment Plan
http://otrans.3cdn.net/ee40602f9a7d8172b8_ozm6bt5oi.pdf

But, his Stimulus that was supposed to fix everything really turned into an $800 billion slush fund.

Fannie Mae, Freddie Mac and the progressive perversion of the Community Reinvestment Act led the way into the financial crisis, yet nowhere in Dodd-Frank, the financial reform legislation, is there any mention of reforming the GSEs or the failed policy.

With a bunch of budget gimmickry, ObamaCare was supposed to cost $940 billion, but just two years later the CBO now says it will cost almost twice as much - $1.76 trillion.

Obama freely admitted that energy costs would "necessarily skyrocket" and be "passed on to consumers" under his policies, and his energy secretary said he wanted to get gas prices "to the levels in Europe."  They have done precisely that, and now claim they had nothing to do with it.

While giving lip-service to regulatory relief, Obama punched an already weak economy in the gut with 75 new major regulations at a cost of $40 billion to the economy, and the avalanche of new regulation from ObamaCare and Dodd-Frank is yet to come.

According to U.S. News Obama has implemented 21 new taxes or tax increases. By some counts there are 20 more new taxes included in ObamaCare, and if he has his way, taxes on large numbers of American families as well as business will go up. And, the dramatic price of gas is like the cruelest regressive tax increase of all hitting working families and low-income people harder than anyone.

Obama wants us to believe that the flicker of light at the end of a still very long dark tunnel should be reason enough to re-elect him. But, the record is clear – there is a very long way to go, and not only have the policies of the Obama Administration failed to aid a recovery to normal economic conditions, in virtually every way imaginable this President has advocated and implemented policies that delayed and worsened the situation. The next time you hear Obama pontificate about new jobs and how he's fixing the economy…well, it might not be quite a Joe Wilson moment ("You lie!"). But, you can bet the President isn't telling you the whole truth either.