In the 10 previous recessions since the Great Depression, prior to this last recession, the economy recovered all jobs lost during the recession after an average of 25 months after the prior jobs peak (when the recession began), according to the records kept by the Federal Reserve Bank of Minneapolis. So the job effects of prior post – Depression – recessions have lasted an average of about 2 years. But under President Obama, by April, 2013, 64 months after the prior jobs peak, almost 5½ years, we still have not recovered all of the recession’s job losses. In April, 2013, there were an estimated 135.474 million American workers employed, still down about 2.6 million jobs from the prior peak of 138.056 million in January, 2008.
Obama’s so-called recovery included the longest period since the Great Depression with unemployment above 8%, 43 months, from February, 2009, when Obama’s so-called stimulus costing nearly $1 trillion was passed, until August, 2012. It also included the longest period since the Great Depression with unemployment at 9.0% or above, 30 months, from April, 2009, until September, 2011. In fact, during the entire 65 years from January, 1948 to January, 2013, there were no months with unemployment over 8%, except for 26 months during the bitter 1981 – 1982 recession, which slayed the historic inflation of the 1970s. That is how inconsistent with the prior history of the American economy President Obama’s extended unemployment has been. That is some fundamental transformation of America.
Moreover, that U3 unemployment rate does not count the millions who have dropped out of the labor force during the recession and President Obama’s worst recovery since the Great Depression, who are not counted as unemployed because they are not considered in the work force. Even though the employment age population has increased by 12 million since the recession began, only 1 million more Americans are counted as in the labor force. With normal labor force participation rates, that implies another 7.3 million missing U.S. jobs, on top of the 2 ½ million missing jobs we are still short from when the recession began, for a total of about 10 million missing jobs.
If America enjoyed the same labor force participation rate as in 2008, the unemployment rate in December, 2012 would have been about 11%, compared to the monthly low of 4.4% in December, 2007, under President George Bush and his “failed” economic policies of the past. We will not see 4.4% unemployment again, without another fundamental transformation of America’s economic policies.
The number of unemployed in January, 2013, at the end of President Obama’s first term, was 7.7 million. Another 7.9 million were “employed part time for economic reasons.” The Bureau of Labor Statistics (BLS) reports, “These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.”
That puts the total army of the unemployed or underemployed at nearly 18 million Americans in January, 2013. They are all counted in the BLS calculation of the U6 unemployment rate, which still totaled 13.9% .
Even Jimmy Carter produced 4 times as much economic growth during his one term as Obama did during his entire first term. In fact, as Anderson notes, real GDP growth under Obama has been the worst of any President in the last 60 years!
You can’t possibly believe the U.S. economy is in a recovery when:
■ Business deaths now outnumber business births: According to the U.S. Census Bureau, the total number of new business startups and business closures per year — the birth and death rates of American companies — have just crossed for the first time since the measurement began. Here, I am referring to employer businesses, those with one or more employees, the real engines of economic growth. Four hundred thousand new businesses are now being born annually nationwide, while 470,000 are dying each year.
Up to 2008, startups outpaced business failures by about 100,000 per year. But in the past six years, that number turned upside down. We are at minus 70,000 in terms of business survival.
Small business is dying in this country, and this will have catastrophic consequences for our economy and way of life. Up to 50% of all jobs are in small businesses, and about 65% of all new good jobs are created by them, according to the Small Business Administration. Without startups and growing small businesses, nothing will fix America’s economic energy, let alone create new good jobs.
What’s worse, the country’s leadership isn’t doing much to revive the entrepreneurial spirit of small businesspeople. More than half of U.S. small-business owners say health care costs (54%) and taxes on small businesses (53%) are hurting their operating environment “a lot,” making these the top two concerns among eight issues tested in a Wells Fargo/Gallup Small Business survey.
■ The federal government’s unemployment rate has little bearing on reality: Notice anyone in your neighborhood or at your workplace celebrating?
■ GDP growth continues to fail expectations:
What is driving the upbeat predictions this time? A technology boom we haven’t yet heard about? Automobile exports? Fracking? The return of manufacturing jobs? Millions of “shovel-ready”
Reality check: The three most important indicators to watch in gauging whether or not America will recover from the 2008 financial crash are if business births begin to outnumber business deaths again; the steady growth of full-time jobs as a percent of the population, and significant GDP growth!
John Denes - CEO - REO Capital
John Denes - CEO - REO Capital