So, again we return to our semi-regular feature–how the US economy languishes in a great jobs depression; a matter not of indifference to the rest of the world since the rest of the world would like American consumers to have enough money to buy their stuff. Here it is, barely changed, the Scariest Chart Ever™ (c/o Calculated Risk):
Now, despite the best jobs report for the US since February, it’s hard to get all happy-clappy about this one. First off, 163,000 is better than the “barely on life support” figures from April to June, but it ain’t so great. I should point out for comparison that the anemic George W. Bush economy in its last good July (2006) produced nearly double this number of jobs, so if this is the new normal then normal sucks. But as usual, digging into the numbers just creates a numbing sense of despair. The 8.3 percent “headline” unemployment number is actually pretty troubling. Why? Well, one expects the U3 number to rise as a jobs recovery gets underway and people who had given up hope of finding employment re-enter the labor market. No such dynamic is occurring here. The Bureau of Labor Statistics reports,
Both the civilian labor force participation rate, at 63.7 percent, and the employment-
population ratio, at 58.4 percent, changed little in July.
As most economists know, these are the figures that matter since they measure employment not simply labor market participation. These numbers have barely inched up at all in the last half year. The broader measure of unemployment (U6, which measures those in part-time employment who wish for full-time jobs) actually inched up to 15 percent, indicating a stalled labor market.
While the Administration can argue that it has improved the dismal jobs situation it inherited, that argument looks pretty weak when one notes that the jobless rate is actually higher now (by about a half percentage point) than when Obama was inaugurated. The US has had 41 months of eight percent or higher U3, and nearly half (about 40 percent) of this figure is made up of long-term unemployed who have been out of work for more than 27 weeks. This is a stunning number and it is increasingly likely that these people will never work again as their job skills atrophy and their resumes are spoiled. When Obama states, “We knew this would take some time,” he is prevaricating. He had no clue that getting the unemployment rate under 8 percent would take this long. In fact, we’ve just passed the two-year anniversary of his Treasury Secretary, Timmy Geithner, announcing to the world that the US had entered “recovery summer.” Recover summer seems a cruel joke now to the millions (at least 5 million!), who have watched their lives cratered by the blighted labor market. As Dylan Matthews reports over at Ezra Klein’s blog, if the economy had returned to the pathetic trend line of the George W. Bush years, there would be 1.27 million more jobs.
Another interesting observation from Matthews (go check out his graphs–they are quite illuminating!), is that every major non-farm employment category except “mining and logging” (yeah, sure environmental regulation is slowing business–yeah, right) and education and health (mostly due to an aging population) is well down from their pre-recession levels. While construction has been hammered, it’s worth noting for our Tory trolls that government employment is–unlike every other previous post-war “recovery” where guys with names like Reagan and Bush (fils et pere) used Keynesian methods of increasing federal employment to prime that pump–is down significantly. Indeed, government shed another 9,000 workers (you know,
teachers and firefighters “bureaucrats”) last month. This jobs reports shows no sign that any of these sectors is about to lead an employment rally, not even the much ballyhooed manufacturing sector. This is still very much a cyclical downturn not a structural unemployment problem (anybody muttering the words “structural unemployment,” with the possible exception of construction, is selling you snake oil–just about every sector is flat-lining). See for yourself:
And yes, we are still eating our young. Youth unemployment for 18-29 year olds is 12.7 percent but since the “declining labor participation rate” of this demographic (euphemism for those having given up on ever finding a job) leaves 1.7 million young adults out of the employment picture, the real number is closer to 16.7 per cent. Fully one in two recent college graduates is unemployed or underemployed (a fact which gets them a scolding for lack of gumption at best).
And of course, the hard and fast rule of the American labor market, that minorities suffer roughly double what the majority population does, is still rock solid. “White” unemployment was 7.4 percent with African-American unemployment at 14.1 percent (Hispanic unemployment actually moved a bit downward to 10.3 percent). It’s also still a “mancession,” but not by much. Adult male unemployment was at 7.7 percent compared to 7.4 percent for adult females.
So, despite the sighs of relief from the White House on the overall jobs number and the cries of apocalypse from the Romney campaign about 41 months of unemployment, the July jobs report is a big fat nothing burger. As usual, the new normal is stagnation.
What is dispiriting is that both Romney and Obama (and everybody else with any damned responsibility) seem to be fine with this. As Krugthullu has been telling anyone who would listen for years, Obama put forward an anemic stimulus and turned far too quickly to austerity measures in a vain attempt to seem “serious” on deficit-cutting. How’d that work out for him? Well, it earned him the greatest thumping of any sitting president’s party in Congressional elections since 1938, following another Dem’s premature austerity. We will pass over in silence the president’s farce of setting up a “jobs council” made up of the CEOs of major off-shoring conglomerates like GE. Now Obama can send up a “jobs” agenda to the Hill all he wants, the Tea Party-controlled GOP will just let it hang fire. And by the way, that “jobs, jobs, jobs” GOP House Majority? Not so much. The House leadership won’t even allow a tax cut for their alleged heart throbs, small business. The Congressional Republicans are, objectively (and I’d argue in lots of cases pretty damn subjectively, too), in favor of high unemployment rates. As for Mitt Romney and his pious cant, well if the preliminary analysis of his smoke-and-mirrors tax plan is indicative of any preference, he seems to favor Weimar-era jobless rates. A bit harsh? No. If he truly intends to slash income and corporate tax rates and make these revenue losses up by reductions to the Federal budget, while adding to the military budget, he will have to lay off a simply staggering number of government employees and raise taxes (excuse me, cut loopholes) for an incredible percentage of taxpayers (and not the rich ones, either). Romney’s plan is Bush’s tax cuts on steroids but without the stimulatory effects of running staggering budget deficits. In other words, Romney is promising (and he has so promised by embracing the Ryan Budget Plan) a vicious form of austerity that would make even David Cameron blink. You can bet that the “medical and education” sector from the graph above would quickly nosedive to join construction. Romney argues that with all that money the rich tax-payers will not be sending to Washington there will be a “Romney Boom” (I kid you not, he named a fantasy economic expansion for himself–the guy ain’t lacking in ego), which will so grow the economy that tax revenues will come pouring in. Yeah. Like they did when Reagan and George W slashed the top tax rates. Oh wait . . .
So the choice for November seems to be ”meh” or “OMG!” And don’t expect any help from the Federal Reserve, Ben Bernanke is carefully studying, carefully studying when he might, just might, consider the economy so faint from loss of blood that he would consider another infusion of free money aka “quantitative easing”; my guess is he will only do so should the investor class take a hit and the stock market indices start tanking. But this is only “seems” because the odds of a double dip recession with this insane clown posse (and yes, I’m including Obama and Bernanke in that designation–deal with it, libs) are getting better and better all the time. The IMF is already getting the vapors looking at the coming ”fiscal cliff” (the ”budget sequestration” and end of all the tax cuts due in the lame duck session–how convenient for dirty deals, eh?). Such slashed spending and across-the-board tax increases are very likely to be contractionary and the IMF, already worried about a Eurozone implosion knows it. Obama already made a play for a stringent austerity plan during last summer’s debt ceiling crisis, but the Tea Party faction was too stupid to take yes for an answer (by the way, thereby saving Obama from himself–hard to imagine him winning re-election having taken a sledge hammer to the New Deal). In other words, there is a very real possibility (especially if the Eurozone goes “BOOM!”) that the Scary Graph will start trending south again very soon.
Now, while this is very convenient for employers (wages have seen very little upward movement since the start of the recession), it is causing untold suffering for millions of people. This suffering is an issue of extreme indifference to America’s economic and political elite. While opinion polls universally indicated jobs as citizens’ major concern, the largely non-existent deficit problem (investors are practically giving money to the government for free in exchange for T-bills) has gotten much more media attention than the burning unemployment crisis. At this point I would not be surprised if large numbers of jobless lighting themselves on fire in front of the White House or Congress would simply be covered as a local arson story. There is an inhuman complacency about the unemployed that is redolent of nineteenth-century social Darwinism or Malthusianism. And, of course, right on schedule some academic sadist (an economist, of course), writes an article on the shiftless poor deserving their plight. Paging Mr. Dickens! Paging Mr. Dickens! Oh, and too, there is suddenly a hipness to libertarian sociopathy (strong word? ok, go read the “railroad tunnel” section of Ayn Rand’s Atlas Shrugged, the Bible of our fine young libertarian cannibals. Go ahead, I’ll wait. Done? Good. Now, tell me you’re surprised Rand admired Leopold and Loeb). That these unemployment numbers continue to not cause immediate measures to curtail them tells us all you need to know about our feral elite. Moreover, given that the Greek and Spanish governments seem quite ok with inflicting this type of destitution on more than 20 percent of their workers, I see no reason not to expect worse. The grand poohbahs who meet in places like Aspen and G-8 meetings have already normalized such Weimar, Part II, conditions.
But maybe, just maybe they might consider the outcome of Weimar policies. In Greece, people who would have sneered at the none-too-crypto-Fascist Golden Dawn party are sullenly lining up in front of Parliament (!) to show their identity papers (to prove they aren’t some sneaky foreigners) to these brown shirts. Why, to get food of course. The scary graph is beginning to look like other scary graphs from other eras.