Glimmer of Hope as Whitehouse Declares Economic Recovery Means More Jobs
Posted by Michael A. Kamperman on September 4, 2009
The August 2009 unemployment rate climbed to 9.7% and the economy officially lost another 216,000 jobs. President Obama’s Administration said today that the President doesn’t consider the country to be out of recession and on the road to recovery until jobs are being created, not just saved. President Obama is correct to measure our economic performance primarily based on the unemployment rate. It is certainly the metric the American people will be using at the polls in 2010 and 2012. This is very refreshing news and offers a glimmer of hope that the President will start to take the economic crisis seriously. The Whitehouse said technical measures like a positive GDP report would not mean the economy has recovered if it is not accompanied by job growth. Meanwhile, many in the media are portraying the August unemployment report as a sign of an improving jobs picture, just because we lost fewer jobs than we lost last month. Others in the media are talking about a jobless recovery. The unemployment rate is the best measure of overall economic performance that we have. It is an oxymoron to talk about a jobless recovery.
The actual unemployment report did not contain any good news. Hours worked stayed at 33.1 hours, which means employers have not yet started bringing their part-time workers back to full-time status and are not increasing over-time. We will not see job growth until we start to see full utilization of companies existing workers. Shockingly, despite the stimulus plan being in full swing in the month of August, government jobs fell by 18,000. This is primarily attributed to layoffs of postal workers and cut backs by state and local governments. Finally, the most distressing news was that the U-6 unemployment rate has now risen to 16.8%. In the early 1980’s when the official U-3 unemployment rate hit 10.8%, an even broader measure of unemployment than U-6 topped out at 15%. The U-6 measurement is telling us we have the worst jobs picture since the 1930’s.
President Obama can at least be thankful that he will not have pictures of economically desperate people in long lines at soup kitchens. This is because our modern method of feeding hungry people is food stamps. The number of Americans receiving food stamps is now a record 35 million, up from 26.5 million in 2007. Recognition of the scope of a problem is the first step in solving it. I detected today the President’s Administration is realizing the jobs picture is much worse than they expected and the stimulus plan is simply not going to create any jobs. It was only in April that his economic team ran stress tests on the nation’s largest banks using a worst case scenario for the 2009 unemployment rate of an average of 8.9%. We are well past the worst case expectations. The President needs to tell his economic team he wants a new plan, because the current one clearly isn’t working.
