Freedom Line Blog

For a record 39th consecutive month, unemployment has exceeded the 8% level that the Obama Administration said we’d never reach in the first place under his government spending “stimulus.”

Compounding that misery, the nation added only 115,000 jobs last month according to this morning’s monthly Labor Department report.  That’s far fewer than the consensus prediction of 163,000 new jobs, which itself is far below the 200,000 needed each month to keep pace with population growth and substantively reduce the unemployment rate.  The Obama Administration claims that the last recession was “the worst since the Great Depression,” but that’s false.  The early-1980s recession conquered by Ronald Reagan’s economic policies was substantially worse – higher unemployment, higher inflation and higher interest rates.  Under Reagan, however, unemployment plummeted from 10.4% to 6.7% in the three years following the effective date of his tax cuts in January 1983.  Obama, in contrast, didn’t face “the worst recession since the Great Depression,” but his agenda of massive spending, regulation and deficits has given us the worst recovery since the Great Depression.

The debate over unemployment benefits isn’t an easy one. While the left completely ignores the rudimentary economics (and the empirical evidence) showing that prolonged benefits tend to keep unemployment artificially high, the fact remains that many workers use the system in good faith, relying on it as a bridge during uncertain times. We can all probably agree, however, that this doesn’t make any sense. From MarketWatch’s report on rising unemployment claims:

Weekly jobless claims jumped by 13,000 to a seasonally adjusted 380,000 in the week ended April 7, the highest level since late January, the U.S. Labor Department said Thursday.

Much of the increase was related to spring break, when many school bus drivers and cafeteria workers are allowed to file for temporary unemployment benefits.

Hey, if this is the direction we’re going, why not allow them to file for unemployment over the weekend? Or perhaps for those oppressive hours of 5 PM-9 AM every weekday when they’re not gainfully employed?

This is an offense both to people who really require unemployment benefits and to the taxpayers who are underwriting school workers’ spring breaks. And with MarketWatch attributing”much of the increase” to these workers, are we to understand that it’s become common practice for school workers to exploit this outrageous provision?

Some aspects of the unemployment debate are difficult trade-offs between economics and empathy. This one, however, is a no-brainer.

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

Ironically, the Obama Administration projected when he entered office that unemployment wouldn’t exceed 8% after his massive spending “stimulus.”  Instead, the rate has exceeded 8% for 38 consecutive months, the most since the federal government began keeping records.  Over three long years.  Of course, Obama can at least claim something on which he has proved reliable.

Today, the Labor Department announced that only 120,000 new jobs were created last month, well below expectations of over 200,000.  That number is insufficient to reduce unemployment by even a single percentage point over a year, and the only reason the rate fell from 8.3% in February to a still-miserable 8.2% in March was that more people gave up and abandoned the workforce altogether.  Under Obama, we have witnessed record spending, record deficits, record regulation and record hostility toward private employers.  So what does he have to show for that?  As detailed this week by The Wall Street Journal, the worst economic recovery in history.  Those straightforward facts speak for themselves.

Over at the Wall Street Journal, James Grant, editor of Grant’s Interest Rate Observer has a perceptive review of the new book, “White House Burning: The Founding Fathers, our National Debt, and Why it Matters to You,” by former IMF Chief Economist Simon Johnson and University of Connecticut law professor James Kwak. Two passages deserve special attention.

On the banking system, Grant writes:

Here’s an idea: Let’s try capitalism for a change.

Rather than the bureaucratic monstrosity called the Dodd-Frank Act, for instance, why not hold the bankers personally accountable for the solvency of the institutions that employ them? Until 1935, bank stockholders would get a capital call if the company in which they had invested became impaired or insolvent. It was their problem, not the government’s. In the same spirit, suggests the New York investor Paul J. Isaac, let the bankers forfeit a portion of their past compensation—say, that in excess of 10 times the average manufacturing wage—if they steer their employer on the rocks. And let them surrender not just one year’s worth but rather seven year’s worth—after all, big banks don’t go broke all at once. Proceeds would be distributed to the creditors, as in days of yore. Bankers should not only take risks. They should also bear them.

And on the endless invocation of the Great Depression as the sole object lesson in how to respond to a severe economic downturn:

Messrs. Johnson and Kwak, who draw the usual conclusions from 1929-33, fail to mention the depression of 1920-21. Yet this cyclical downturn was as instructively brief as it was ugly. Peak to trough, nominal GDP plunged by 23.9%, wholesale prices by 40.8% and the CPI by 8.3%. Unemployment, as it was then inexactly measured, soared to 14% from a boomtime low of 2%. And how did the successive administrations of Woodrow Wilson and Warren G. Harding, along with the Federal Reserve, meet this national disaster? Why, they balanced the budget and raised interest rates. Yet for reasons never examined in the pages of this book, that depression promptly ended and the 1920s roared.

Grant’s theme? Responsibility, both personal and collective. That has the great virtue of being the right thing to do. It also has one even greater virtue: it works.

Upon taking office in 2009, the Obama Administration projected that its unprecedented government spending “stimulus” would prevent unemployment from exceeding 8%, which would occur all the way back in October 2009 and be down to approximately 6% today.

Instead, with today’s announcement from the Labor Department, unemployment held steady at 8.3% last month.  That makes 37 consecutive months above the 8% mark the Obama Administration said we wouldn’t exceed at all, the most since the federal government began keeping records.  Moreover, the number of new jobs added is barely enough to tread water, despite Obama Administration celebrations to the contrary.  Whereas unemployment quickly plummeted from 10.8% to 6.7% following implementation of Reagan’s tax cuts, it has increased under Obama from 7.8% to over 10% and three straight years over 8%.

Wherein Valerie Jarrett, perhaps the most consistently insipid of the White House courtiers, declares unemployment a form of stimulus:

An editorial by Investor’s Business Daily highlights why the Obama campaign’s crowing about a nascent economic recovery is hiding the real pain American workers are feeling:

Even worse for an administration straining to make the case that it deserves to be around for another four years is the real unemployment rate. It’s not 8.3%, but closer to 15%, a figure that reflects those who “would like to work but have not searched for a job in the past four weeks as well as those who are working part time but would prefer full-time work,” says the CBO.

Another White House problem comes from this in the CBO report: “The share of unemployed people looking for work for more than six months — referred to as the long-term unemployed — topped 40% in December 2009 for the first time since 1948, when such data began to be collected; it has remained above that level ever since.”

Voters aren’t stupid.  If the eventual Republican nominee can make a compelling argument linking Obama’s policies to the decline in jobs, he’ll win.  If not, we’ll have nearly an entire decade of lost opportunities.

Today’s Department of Labor report that unemployment declined slightly from 8.5% to 8.3% in January will surely be celebrated and trumpeted by the Obama Administration.  Which only serves to illustrate the terrible quality of his economic performance in office.

First of all, today’s announcement means that unemployment has now exceeded 8% for 36 consecutive months, three entire years.  That’s an all-time record since recordkeeping began.  Second, that new record is not somehow a reflection of the fact that the most recent recession was “the worst since the Great Depression,” as Obama and his apologists constantly claim.  Unemployment actually reached a higher peak in the early 1980s recession, but quickly plummeted from 10.8% to 6.7% following implementation of Reagan’s tax cuts.  In contrast, unemployment has increased under Obama from 7.8% to over 10% and three straight years over 8%.  Moreover, inflation and interest rates were far higher in the early 1980s recession, and monetary policy was much tighter, meaning that conditions were less hospitable for economic improvement.  Third, for all of the deficit spending the Obama Administration heaped upon American taxpayers, it promised that unemployment under its agenda would be down to around 6% by now.

Instead, we’re barely treading water and mediocre news is characterized as wonderful.  This is the Age of Obama.

Regular readers know that I’m far from the biggest Mitt Romney supporter in the world. That being said, the criticisms of his time at Bain Capital leveled by fellow candidates Newt Gingrich, Jon Hunstman, and Rick Perry have been shockingly opportunistic and intellectually dishonest, particularly for self-proclaimed advocates of free market capitalism (they’ve also ignored the more salient criticism — the numerous instances in which Bain lived off the taxpayer).

Over at Ricochet, I have a proposed rhetorical response for Romney. The whole’s thing here, but here’s a sample:

I would remind my opponents – as I would remind President Obama – that work is a form of public service. Our ability to make money is directly tied to our ability to provide something of value to our fellow man. But sometimes when the customer’s needs change or when we lose ground to our competitors, we have to make changes. We don’t choose these circumstances. As a matter of fact, we hate these circumstances. But, like many Americans that are struggling today, we accept the things that we cannot change, we make the hard choices, and we persevere. That is never an easy task. And unfortunately, sometimes people lose their jobs as a result. But what, I wonder, do my opponents think the alternative is?  If a company on the brink of failure has no choice but to let a few employees go now or to see all of their jobs disappear eventually, what should they do?

Those are the kind of painful choices that people face in the real economy. And I find it telling that that concept is foreign to my opponents. They’re not foreign to the American people – because they’re living through them every day. You can talk to anyone who’s ever sat behind a manager’s desk – whether it’s in a corner office or a corner store – and they’ll tell you that there’s nothing that they hate more than having to fire someone. Americans take pride in their work. Losing a paycheck hurts. But losing your sense of dignity hurts more. My experiences in business didn’t make me enjoy firing people. It made me loathe the politicians in Washington for whom those people are nothing more than statistics on a spreadsheet.

Today’s jobs report from the Labor Department shows that unemployment has now exceeded 8% for 35 consecutive months, the most since the federal government began keeping records.

The reason that 8% number is important is that the Obama Administration promised in January 2009 that unemployment would not exceed it under his $1 trillion spending “stimulus.”  They also projected that unemployment would peak in October of that year, and be down to approximately 6% today.  Instead, the jobless rate ascended past 10%, and has never come in below 8% since.  Moreover, the incremental decrease from November’s 8.7% rate was due to a decline in the size of the nation’s workforce.  Further, the 200,000 jobs added is barely sufficient to tread water with population growth.

By this point in our cyclical recovery, employment growth should be much stronger, and unemployment much lower.  To compare alternative economic strategies, Ronald Regan dealt with even higher unemployment than has Obama (not to mention far higher inflation and interest rates back then).  But Reagan’s tax-cutting and smaller-government policies slashed unemployment from 10.4% on the effective date of his tax cuts to 7.0% in the same 35-month span Obama has had.  The answer to the Obama jobs freeze is clear.  It’s simply up to the American electorate to demand it.

When Barack Obama entered office and proposed his nearly $1 trillion spending “stimulus” bill, his administration promised that unemployment would peak at 8% in the fall of 2009 if we passed his plan.  They also predicted that unemployment would be down to approximately 6% by now.

Instead, following today’s latest report from the Department of Labor, unemployment has now exceeded Obama’s promised 8% ceiling for a record 34th consecutive month.  Although some will focus on the decline from 9.0% to 8.6%, most of that statistical decline is due to people giving up and dropping out of the labor force, rather than from sudden job creation.  That is illustrated by the fact that only 120,000 net jobs were added, less than the anticipated number.  That’s also fell far below the 200,000 new jobs needed each month to reduce the unemployment rate by just 1% over the span of a year. Additionally, the broader labor participation rate again declined and now stands at 64%.

In contrast to the destructive effects of Obama’s borrow-and-tax-and-spend agenda, Ronald Reagan’s tax-cutting agenda saw unemployment plummet from 10.4% to 7.1% over the same period of time.  As the old Latin saying goes, “res ipsa loquitur” – the fact speaks for itself.

The nation’s unemployment remained at or above 9% again last month, and has now exceeded 8% for 33 consecutive months since February 2009.  That’s the longest stretch since the federal government began issuing monthly reports in 1948.

Here’s why that 8% benchmark and February 2009 are important.  When Obama passed his nearly $1 trillion “stimulus” bill that same month, his administration projected that unemployment would never exceed 8%, and be all the way down to approximately 6% today.  Instead, unemployment quickly climbed to 10.1%, and has remained above 9% for all but four months during that record 33-month span.  Moreover, the economy only added a disappointing 80,000 jobs for September, less than the expected 100,000 and far below the estimated 200,000 necessary each month to reduce the rate by just 1% over the course of a year.

It’s instructive to compare the real-world results of Obama’s economic agenda with Ronald Reagan’s.  In the same 33-month stretch following the effective date of Reagan’s tax cuts, unemployment plummeted from 10.4% to 7.1%.  The comparison speaks for itself, yet now Obama tells the nation that what we need is more of the same – more “mini-stimulus” government spending.  Obama’s agenda has demonstrably failed, and it’s time to return to what demonstrably works.

So the government reported tepid 2.5% gross domestic product (GDP) third quarter growth yesterday, and the market celebration it triggered says a lot about the bleak nature of the Obama economy.

First of all, that reading fell below consensus expectations of 2.7% growth.  Second, 2.5% falls almost a full percentage point below the post-war historical average of 3.3% quarterly growth.  Third, GDP should be growing even faster than that 3.3% long-term average during a period of so-called “recovery” – recall that the most recent recession officially ended nine quarters ago in June 2009.  At a similar point during the Reagan recovery in 1984, GDP grew at a 7.1% rate following consecutive quarters of 9.3%, 8.1%, 8.5% and 8.0% growth.  And at the same point during the Bush recovery from the Clinton/Gore tech bubble downturn and 9/11, GDP grew 3.7% following a previous quarter of 6.7% growth.  Fourth, 2.5% growth is insufficient to significantly improve the nation’s festering unemployment problem.

A 2.5% rate certainly beats the 0.4% and 1.3% readings for the preceding two quarters of 2011, but America’s desperate need for new economic leadership becomes clear when such a lackluster result is seen as “good” news.

In an ominous sign, the nation’s consumer confidence plummeted in October to lows not seen since March 2009, three months before the last recession officially ended.  After improving to 46.4 in September, the measure fell 7 points to 39.8, well below what economists expected.  That reading is also far below the 90 level that economists generally agree indicates a healthy economy.

So along with the cyclical recovery following the last recession, consumer confidence rose but has now returned to lows not seen since that time.  It will therefore be interesting to watch Barack Obama and liberals attempt to once again scapegoat the Bush Administration for this, almost three years since Bush departed office, and five years since his party last controlled Congress.

Count us surprised here at CFIF that Senate Majority Leader Harry Reid has any hangups about the current state of the economy. Remember, this is the man who said last year that without him the world would have slumped into a global depression. Apparently, though, the senior senator from Nevada has now realized there is a crisis — too little government spending going towards public employees:

9.1 percent of Americans are currently unemployed, as are 13.4 percent of Senator Reid’s fellow Nevadans. “Just fine”, we suppose, is a relative concept.

Unemployment remained unchanged at 9.1% last month, and has now exceeded 8% for 32 consecutive months since February 2009.  That’s the longest stretch since the federal government began issuing monthly reports in 1948.

And there’s a reason why that 8% benchmark is important.  When Obama passed his nearly $1 trillion “stimulus” bill that same month, his administration projected that unemployment would never exceed 8%, and be all the way down to approximately 6% today.  Instead, unemployment quickly climbed to 10.1%, and has remained above 9% for all but two months in that record 32-month span.  Moreover, the economy only added a lackluster 100,000 jobs for September, far below the estimated 200,000 necessary each month to reduce the rate by just 1% over the course of a year.  Compounding that depressing figure, keep in mind that approximately 45,000 of the jobs that were added came as a result of Verizon employees returning to work after striking in August.

It is helpful to compare the real-world results of Obama’s economic agenda with Ronald Reagan’s.  In the same 32-month stretch following the effective date of Reagan’s tax cuts, unemployment plummeted from 10.4% to 7.1%.  The comparison speaks for itself, yet now Obama demands that the country pass more of the same – his new “mini-stimulus.”  Mr. Obama, it’s time to return to what demonstrably works, not continue what demonstrably doesn’t.

The Los Angeles Times reports that California’s unemployment is now 12.1 percent statewide, 25 percent higher than the national average, and second only to Nevada’s 13.4 percent.

For decades, California politicians have prided themselves on being “first in the nation” on numerous job-killing efforts such as fanciful global warming regulations, onerous land use regulations, and stupefying bans on products like Mylar balloons and plastic bags at grocery stores.

Recently, Troy wrote a painfully insightful piece on yet another attempt to wage war on business by Los Angeles Mayor Antonio Villaraigosa (higher taxes on commercial property).

California’s political class cannot resist the siren song of being the first to put the screws to the engines of economic growth.  If Villaraigosa’s plan becomes reality, perhaps the Golden State will finally be first in a category no one should want: unemployment.

Zero.  That’s the number of net jobs created in America last month according to the Labor Department’s monthly update, and the unemployment rate remained at 9.1%.

We are now more than two years since the recession officially ended in June 2009, and at the stage where the Obama Administration predicted that his trillion-dollar deficit spending “stimulus” would reduce unemployment to approximately 6% after topping out at 8% all the way back in the fall of 2009.  Instead, we suffered a post-war record number of months over 9%, and it continues to fester there.  By way of background, keep in mind that economists generally agree that a minimum of 150,000 to 200,000 jobs must be added to the American economy each month just to keep pace with natural population growth.  Also consider that economists had forecast a rise of somewhere near 100,000 jobs for July.

In contrast, in the same 30-month period following the effective date of President Ronald Reagan’s tax cuts in January 1983, unemployment plummeted from 10.4% to 7.4%.  We know what economic policies actually work.   What hath the opposite approach wrought?

This defines cognitive dissonance.  The Obama Administration continues to scratch its collective head, wondering why its record deficit spending “stimulus” and big government onslaught has failed to create jobs.  Meanwhile, its own Department of Justice sues an iconic American company that creates them.

Just today, AT&T announced that it is relocating thousands of jobs from overseas back to American shores.  But also today, the Obama Department of Justice – you know, the one ultimately behind the disastrous “Operation Fast and Furious” – sued to block the proposed private merger between AT&T and T-Mobile.  Ponder that irony for a moment.  The Obama Administration, which has done so much to interfere with job creation since the recession officially ended all the way back in June 2009, is suing an employer that at this very moment is orchestrating the return of thousands of jobs to the United States.

Perhaps we shouldn’t find this surprising.  After all, the Obama Administration is also in the process of persecuting Boeing, America’s largest exporter, simply for electing to locate a manufacturing plant in South Carolina.  But that doesn’t make its behavior any less despicable or destructive.  If Obama truly wants to prove to the electorate that he seeks economic recovery, he must reverse this policy course within his administration.  Immediately.