Donald Lambro

The White House was hit by a huge political body blow last week when the Labor Department said the economy added only 74,000 jobs last month. That was the slowest job creation number in three years, suggesting that hiring in the Obama economy remains far too weak to make a serious dent in the unemployment rate.

The jobless rate did fall to 6.7 percent in December, but that's because thousands of long-term jobless Americans said they were no longer looking for work, and thus are no longer counted among the unemployed.

Administration officials said the continuing decline in the adult labor force participation rate to historically low levels was due to baby boomer retirements.

But "anemic adult participation cannot be explained by an aging labor force, especially with so many seniors working part-time" to make ends meet, writes University of Maryland business economist Peter Morici.

"Were the [labor force] participation rate the same today as when Obama took office, unemployment would be about 10.8 percent," he said.

There were close to four million long term unemployed Americans last month who have been out of work for six months or more -- a figure that was unchanged from the previous month. They make up one- third of the 11 million unemployed.

"The nation is in a jobs crisis," says Morici. Expect to hear that refrain repeated by the Republicans throughout the rest of this year.

Meantime, another financial time bomb may be looming on the horizon that could have disastrous consequences for our so-called economic recovery.

Economist Peter Wallison, a member of the Financial Crisis Inquiry Commission, is sounding the alarm on another housing mortgage bubble he sees ahead of us.

Wallison is remembered as the sole voice on the panel who filed a blistering dissenting opinion on its report that the financial collapse was largely caused by the big banks and Wall Street. He argued that lawmakers were to a large degree responsible for the crisis by enacting "affordable housing" laws that slashed down payment rules that led to millions of foreclosures and huge financial losses.

In an op-ed column in The New York Times, Wallison -- a senior fellow at the American Enterprise Institute -- said that another bubble "is beginning to grow again" and the chief culprit is the government.

"The Federal Housing Administration is requiring down payments of just 3.5 percent," and the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) "are requiring a mere 5 percent," he said.

According to the AEI's National Mortgage Risk Index data, "about half of those getting mortgages -- not to refinance -- put 5 percent or less down."

When critics of this policy suggest that down payments should be the once traditional 10 or 20 percent, "the outcry in Congress and from brokers and homebuilders is deafening," Wallison wrote.

"If we expect to prevent the next crisis, we have to prevent the next bubble," he says.

To paraphrase a memorable movie line delivered by Bette Davis, fasten your seat belts, we're in for a bumpy ride.

Donald Lambro

Donald Lambro is chief political correspondent for The Washington Times.