Twenty-eight months after Congress passed President Obama’s signature economic stimulus law, and nearly one year after he declared the summer of 2010 to be “Recovery Summer,” 1.9 million fewer people are employed.
In February 2009, the Bureau of Labor Statistics (BLS) reported that 141.7 million people were employed. By the end of May 2011 – the last month for which data are available – that number had fallen to 139.8 million, a difference of 1.9 million.
While the number of people with jobs has increased slightly from its low point during the recession – 137.9 million in December 2009 – those 1.9 million jobs have been lost despite $800 billion in stimulus spending.
This does not mean that the economy is not creating jobs, but rather that it is not creating jobs fast enough to keep up with a combination of layoffs and people entering the job market for the first time.
In a Washington Post op-ed, former White House chief economist Larry Summers noted that the percentage of the population that has a job has not improved, even though the economy is technically in recovery.
“From the first quarter of 2006 to the first quarter of 2011, the U.S. economy’s growth rate averaged less than 1 percent a year,” Summers wrote. “The fraction of the population working remains almost exactly at its recession trough, and recent reports suggest that growth is slowing.”
The fraction of the population with a job has in fact fallen in the 28 months since Congress passed the stimulus – down from 60.3 percent in February 2009 to 58.4 percent in May 2011.
The economy cannot create jobs fast enough to keep pace with layoffs and recent high school and college graduates seeking employment. If the trend continues, as Summers notes may happen, the economy will suffer further in the future as college graduates delay entry into the labor force, reducing their lifetime productivity.
As both Summers and the BLS data make clear, the economy is not creating new jobs fast enough to make up for layoffs and new graduates, calling into question Obama’s oft-repeated claim that the economy is recovering and creating jobs.
In fact, by citing figures from the first quarter of 2006, Summers is understating the economy’s poor performance. According to BLS data, the number of people with jobs peaked at 146.6 million in November 2007, meaning that over the entire recession – which officially began in December 2007 – the number of people employed has fallen by 6.8 million. (CNS &WP)
Some of these smaller firms are responding to inflation by passing it on to their customers. A net 12% of firms reported higher prices in April. You can see from the chart that prices have been rising quickly over the past couple of months:
This report is a discouraging sign for the recovery for two reasons. You just saw the first one: consumers are facing higher prices. As their purchase power declines, so will their ability to buy as many goods and services. This is a purely mathematical result: if your dollar doesn’t go as far, you can’t buy as much stuff. And if consumers don’t buy as much stuff, then the economy demands less stuff and hiring doesn’t need to rise. (the atlantic)
“Beyond the lack of jobs and incomes, an economy producing below its potential for a prolonged interval sacrifices its future,” argued Summers. “Huge numbers of new college graduates are moving back in with their parents this month because they have no job or means of support.” (WP)
So Inflation hurts business.
Consumers pay more and spend less.
Business don’t hire because they are making due with what they’ve got and don’t have to take the risk of hiring someone else, or the expense.
Now that’s Stimulus! Good Going Dear Leader!
If you can’t have more, you learn to make due with less.
Now if only Congress learned that hard lesson instead of the people.
“Businesses are producing only 3 percent fewer goods and services than they were at the end of 2007, yet Americans are working nearly 10 percent fewer hours because of a mix of layoffs and cutbacks in the workweek.”
Which mean the 10 million people who lost their jobs are going to have a tough time getting them back, especially with an anti-business President in the White House.
But don’t worry, everything is great. The economy is getting better. And Obama is not at fault for any of it.
And they have plans to combat something that doesn’t even exist yet! (and they created by the way). Rejoice!
Oh, and the Stimulus kept it from being worse so it “worked” despite all the evidence to the contrary.
Instead of being eaten by the world devouring Galactus, we are being slowing eaten to death in the Sarlac Pit.
Gee, that makes me feel better!
Isn’t politics fun.