There are three main reasons that this recovery isn’t generating enough jobs:
Six months after the last recession ended, the U.S. economy began growing at an annual rate of 3.8%, adjusted for inflation. And although it has slowed since then, real growth for the most recent quarter was 2.2%. That may not sound too bad, given that the U.S.
Nate Silver’s statistical analysis indicates that incumbent Presidents since World War Two, and especially from 1980, have been likely to be re-elected if U.S. jobs are increasing at a rate of 150,000 a month in the election year. The United States in fact added 227,000 jobs in February.
If Silver is correct, President Obama should be on track to win—barring the unforeseen—in spite of an unemployment rate still stubbornly high and long-term unemployment at record levels. Of course he is helped by the lack of a sensible economic policy from any of his potential Republican opponents.
Click on Obama’s Magic Number? 150,000 Jobs Per Month for Nate Silver’s report in his FiveThirtyEight column for the New York Times column.
Click on Today’s Jobs Report in Pictures and The Legacy of the Great Recession for charts by the Center for Budget and Policy Priorities showing just how bad the job situation still is.
Click on Statement by chief CPBB Chad Stone on the February employment report for analysis of the February jobs figures.
Click on Full Employment: A Force Against Rising Inequality and Stagnant Incomes for a report by economist Jared Bernstein on why it is vital to get back to a full employment economy.
Hat tip to Barry Ritholtz’s The Big Picture for the chart.
The top 1 percent of American income earners came bouncing back from the recession in great shape. About 93 percent of the nation’s 2010 income gains flowed to them.
There are two ways of interpreting this. One is that the 1 percent are Ayn Rand heroes who all by themselves generated 93 percent of the nation’s gains in wealth over 2009. My interpretation is that the system is flawed.
Notice that most of the gains of the upper 1 percent were in the form of capital gains, which is taxed at a 15 percent rate, in contrast to taxes on earned income, which is taxed at rates starting at 10 percent and rising in increments to 35 percent. What this means is that although the income of the middle class is taxed at a higher rate than the income of the poor, and the income of the affluent at a higher rate than the middle class, the income of the ultra-rich is taxed at a lower rate than the income of the middle class.
Click on The 1% Had a Fantastic 2010 for Mike Konczal’s comment on the Rortybomb web log (and a hat tip to Konczal for the chart).
Click on The One Percent Bounce Back for Timothy Noah’s comment in The New Republic.
Click on The World’s Top Incomes Data Base created by Facundo Alvarado, Tony Atkinson, Thomas Piketty and Emmanuel Saez for the Paris School of Economics Center for Equitable Growth.
New unemployment insurance claims
It is a fact that economic recovery began after President Obama took office. I believe that the recovery was helped by his economic stimulus program and by programs already in place such as food stamps and unemployment insurance. These helped cushion the effects of the recession and allow recovery to take place. I can’t prove this. There is no way to go back in time and run another scenario in which the government stood aside and allowed events to take their course.
The problem is that the recovery is so slow, and that even when and if economic conditions get back to the way they were before. During the supposed expansion preceding the 2007 recession, wages were declining (in terms of buying power), American manufacturing was being eroded and poverty was increasing.
Below are some charts which illustrate the weakness of the current economic recovery.
Less than a third of the workers who lost their jobs in the Great Recession have made it back, or are climbing back, to where they were before, according to a Rutgers University study.
In August, 2009, researchers at Rutgers Center for Workforce Development interviewed about 1,200 workers, representing a cross-section of the population, who’d lost their jobs during the preceding year, and the researchers followed them for the next two years to see how they made out. The chart at right shows what they found out.
The meaning of the five categories is as follows.
Source: Jesse’s Café Américain
Of the 1,202 workers questioned, 47 percent rated their personal financial situation as “poor” and 36 percent “only fair.” The economic situation has had a “major impact” on 58 percent, and 41 percent expect the changes to be permanent.
Click on Categorizing the Unemployed PDF for the full study.
Hat tip to Digby at Hullabaloo.
Click on Anatomy of a soft economy for the original version of the chart in Fortune magazine.
Click on American Idiots: How Washington is destroying the U.S. economy for the article by Alan Sloan, Fortune magazine’s senior editor-in-chief, that went with the second chart.
I have to say that I like the charts a lot more than I do Sloan’s article. He thinks that the economic crisis is primarily a result of federal budget problems, and that it can be fixed by tinkering with the tax code and chipping at Social Security and Medicare. As the chart itself shows, the problems are much more fundamental than that.
Hat tip to The Big Picture.
This graphic sums up the past 60 years of the U.S. economy very well.
It accompanied an article in the New York Times by Robert Reich, former U.S. Secretary of Labor and professor of public policy at the University of California at Berkeley.
Click on The Limping Middle Class to read the article.
Hat tip to The Big Picture.
Click to enlarge
Chart shows monthly change in private-sector jobs under Bush (red) and Obama (blue). Chart by Steve Benen of Washington Monthly. Click to view.
The U.S. economy is showing some recovery, and reputable economists agree that the Obama stimulus program did some good, but the economic recovery is stalling, and we have a long way to go before we get back to the way things were before the recession.
It would be nice if President Obama, House Speaker John Boehner and other top leaders would show as much concern about the jobs deficit as they do about the federal government’s budget deficit. Even if you think the latter is the only thing that matters, a lot of the deficit is due to the fact that recession has sidelined millions of people willing and able to work and pay taxes.
