Skip to comments.The Stall Has Arrived (Even leftists are admitting it)
Posted on 05/05/2012 11:14:10 AM PDT by Signalman
The economy has stalled.
Fridays jobs report for April was even more disappointing than March. Employers added only 115,000 new jobs, down from Marchs number (the Bureau of Labor Statistics revised the March number upward to 154,000, but thats still abysmal relative to whats needed). We need well over 250,000 new jobs per month in order to begin to whittle down the vast number of jobs lost in the Great Recession. At least 125,000 new jobs are necessary each month just to keep up with an expanding population of working-age people.
With only 115,000 jobs in April, the hole is getting even deeper.
Most observers pay attention to the official rate of unemployment, which edged down to 8.1 percent in April from 8.2 percent in March. That may sound like progress, but its not. The unemployment rate dropped because more people dropped out of the labor force, too discouraged to look for work. The household survey, from which the rate is calculated, counts as unemployed only people who are actively looking for work. If you stop looking because the job scene looks hopeless for you, youre no longer counted.
In the winter months December, January, and February hiring had seemed to pick up, averaging over 250,000 new jobs per month. Then the mini-surge stopped. The simplest explanation is that the mild winter across much of the United States gave an unusual boost to hiring then, leading to a correction by the spring.
Most of the job gains in April were in lower-wage industries retail stores, restaurants, and temporary-help. That means average wages continue to drop, adjusted for inflation continuing their long-term decline. Most of the new jobs that have been added to the U.S. economy during this recovery have paid less than the jobs that were lost during the downturn.
What does all this mean? Together with other recent data showing slower economic growth during the first quarter of this year, its safe to say the economy has stalled.
This is bad news for millions of Americans.
Its also bad news for Obama and the Democrats. Voters dont pay much attention to the economy in an election year until after Labor Day, so its not necessarily a huge help to Romney and the Republicans. But its a bad political omen nonetheless.
No set of policies between now and Election Day are likely to expand the economy. To the contrary, government at all levels continues to contract, acting as a fiscal drag when government needs to be doing the exact reverse boosting the economy through additional spending. In 2013, when spending major cuts are scheduled, well fall off a fiscal cliff.
Obama needs to push back loudly and clearly, saying he wont support additional spending cuts until the economy is showing clear signs of improvement.
But widening inequality is the underlying culprit here. As long as almost all the gains from economic growth continue to go to the top, the vast middle class doesnt have the purchasing power to boost the economy on its own. And rich Americans spend a much smaller portion of their incomes than does the vast middle class. Their marginal satisfaction from additional spending falls off. The second yacht isnt nearly as much fun as the first.
Get it? Weve still got a terrible cyclical problem we cant get out of the gravitational pull of the Great Recession.
Yet the underlying problem is structural, and its been growing for decades. The structural problem of stagnant or declining real incomes for most people, and soaring income and wealth at the top, was masked during the boom years when the middle class could turn their homes into piggy banks and extract home-equity loans or refinance. But the mask came off in 2008 as home values plummeted.
Theres no way to put the mask back on. Weve got to face the truth. Obama and the Democrats have to explain to the American people why inequality isnt just unfair; its also economically unsustainable.
Obama can’t win less than 40-45% of the vote. When you add up all the welfare queens and food stamp recipients and people on their 90th month of unemployment, most of these will vote to re-elect Obama to keep the gravy train flowing. I would be shocked if Obama gets less than 45% of the electoral vote.
But more than 50% of the nation works, pays taxes and is in mortal fear of everything from job loss, to 401k’s being raided, to falling house values, to rising gas prices. Obama is going to lose but it will be close. Those on the gravy train are well over 40% so there is no way he wins less than 45% of the vote.
I still think he loses because of the economy.
“When you add up all the welfare queens and food stamp recipients and people on their 90th month of unemployment, most of these will vote to re-elect Obama to keep the gravy train flowing.”
People who have already run out of unemployment will be the first to show up to vote against Obama; those that are approaching the end will be right behind them.
“But more than 50% of the nation works, pays taxes and is in mortal fear of everything from job loss, to 401ks being raided, to falling house values, to rising gas prices.”
The falling house prices and rising prices for everything else are shared by many of the unemployed; even people on fixed incomes (retirement, unemployment, disability) are getting creamed at the cash register.
“Obama cant win less than 40-45% of the vote.”
I’d love to see how he intends to win more than 25% of the popular vote. “His” losses in 2009 (in states that he carried a year earlier - NJ, MA, VA), followed by his beat-down in the midterms, tell me a lot more than any BS poll released by Obama’s media. When I see him reaching out to college students and blacks (both of which, like everyone else except government workers, are worse off than 4 years ago), I take that as a sign that he knows he has lost the middle class and swing voters. When things are this bad, there is no more “swing vote”.
Great links, thanks.
Well then the reduced labor participation can’t be due to a flood of senior citizen retirements.
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