Obama Economic Recovery Ends: Shortest and Weakest Recovery After 10 Post War Recessions–Obama Recession Starts–Videos

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U-6 Unemployment Rate

Debacle: How Obama Incentivized Sloth & Created the Weakest Recovery In Modern History

Congressman Kevin Brady (R-TX) speaks about July’s Employment Numbers on CNBC

The President’s Policies Aren’t Working

Economic recovery is weakest since World War II

“…recession that ended three years ago this summer has been followed by the feeblest economic recovery since the Great Depression.

Since World War II, 10 U.S. recessions have been followed by a recovery that lasted at least three years. An Associated Press analysis shows that by just about any measure, the one that began in June 2009 is the weakest.

The ugliness goes well beyond unemployment, which at 8.3 percent is the highest this long after a recession ended.

Economic growth has never been weaker in a postwar recovery. Consumer spending has never been so slack. Only once has job growth been slower.

More than in any other post-World War II recovery, people who have jobs are hurting: Their paychecks have fallen behind inflation.

Many economists say the agonizing recovery from the Great Recession, which began in December 2007 and ended in June 2009, is the predictable consequence of a housing bust and a grave financial crisis.

Credit, the fuel that powers economies, evaporated after Lehman Brothers collapsed in September 2008. And a 30 percent drop in housing prices erased trillions in home equity and brought construction to a near-standstill.

So any recovery was destined to be a slog.

“A housing collapse is very different from a stock market bubble and crash,” says Nobel Prize-winning economist Peter Diamond of the Massachusetts Institute of Technology. “It affects so many people. It only corrects very slowly.”

The U.S. economy has other problems, too. Europe’s troubles have undermined consumer and business confidence on both sides of the Atlantic. And the deeply divided U.S. political system has delivered growth-chilling uncertainty.

The AP compared nine economic recoveries since the end of World War II that lasted at least three years. A 10th recovery that ran from 1945 to 1948 was not included because the statistics from that period aren’t comprehensive, although the available data show that hiring was robust. There were two short-lived recoveries — 24 months and 12 months — after the recessions of 1957-58 and 1980.

Here is a closer look at how the comeback from the Great Recession stacks up with the others:

—FEEBLE GROWTH

America’s gross domestic product — the broadest measure of economic output — grew 6.8 percent from the April-June quarter of 2009 through the same quarter this year, the slowest in the first three years of a postwar recovery. GDP grew an average of 15.5 percent in the first three years of the eight other comebacks analyzed.

The engines that usually drive recoveries aren’t firing this time.

Investment in housing, which grew an average of nearly 34 percent this far into previous postwar recoveries, is up just 8 percent since the April-June quarter of 2009.

That’s because the overbuilding of the mid-2000s left a glut of houses. Prices fell and remain depressed. The housing market has yet to return to anything close to full health even as mortgage rates have plunged to record lows.

Government spending and investment at the federal, state and local levels was 4.5 percent lower in the second quarter than three years earlier.

Three years into previous postwar recoveries, government spending had risen an average 12.5 percent. In the first three years after the 1981-82 recession, during President Ronald Reagan’s first term, the economy got a jolt from a 15 percent increase in government spending and investment.

This time, state and local governments have been slashing spending — and jobs. And since passing President Barack Obama’s $862 billion stimulus package in 2009, a divided Congress has been reluctant to try to help the economy with federal spending programs. Trying to contain the $11.1 trillion federal debt has been a higher priority.

Since June 2009, governments at all levels have slashed 642,000 jobs, the only time government employment has fallen in the three years after a recession. This long after the 1973-74 recession, by contrast, governments had added more than 1 million jobs.

—EXHAUSTED CONSUMERS

Consumer spending has grown just 6.5 percent since the recession ended, feeblest in a postwar recovery. In the first three years of previous recoveries, spending rose an average of nearly 14 percent.

It’s no mystery why consumers are being frugal. Many have lost access to credit, which fueled their spending in the 2000s. Home equity has evaporated and credit cards have been canceled. Falling home prices have slashed home equity 49 percent, from $13.2 trillion in 2005 to $6.7 trillion early this year.

Others are spending less because they’re paying down debt or saving more. Household debt peaked at 126 percent of after-tax income in mid-2007 and has fallen to 107 percent, according to Haver Analytics. The savings rate has risen from 1.1 percent of after-tax income in 2005 to 4.4 percent in June. Consumers have cut credit card debt by 14 percent — to $865 billion — since it peaked at over $1 trillion in December 2007.

“We were in a period in which we borrowed too much,” says Carl Weinberg, chief economist at High Frequency Economics. “We are now deleveraging. That’s a process that slows us down.”

—THE JOBS HOLE

The economy shed a staggering 8.8 million jobs during and shortly after the recession. Since employment hit bottom, the economy has created just over 4 million jobs. So the new hiring has replaced 46 percent of the lost jobs, by far the worst performance since World War II. In the previous eight recoveries, the economy had regained more than 350 percent of the jobs lost, on average.

During the 1981-82 recession, the U.S. lost 2.8 million jobs. In the three years and one month after that recession ended, the economy added 9.8 million — replacing the 2.8 million and adding 7 million more.

Never before have so many Americans been unemployed for so long three years into a recovery. Nearly 5.2 million have been out of work for six months or more. The long-term unemployed account for 41 percent of the jobless; the highest mark in the other recoveries was 22 percent.

Gregory Mann, 58, lost his job as a real estate appraiser three years ago. “Basically, I am looking for anything,” he says. He has applied to McDonald’s, Target and Nordstrom’s.

“Nothing, not even a rejection letter,” he says.

His wife, a registered nurse, has lost two jobs in the interim — and just received an offer to work reviewing medical records near Atlanta.

“We are broke and nearly homeless,” he says. “If this job for my wife hadn’t come through, we would be out on the street come Sept. 1 or would have had to move in with relatives.”

Federal Reserve Chairman Ben Bernanke has called long-term unemployment a “national crisis.” The longer people remain unemployed, the harder it is to find work, Bernanke has said. Skills erode, and people lose contact with former colleagues who could help with the job search.

—SHRINKING PAYCHECKS

Usually, workers’ pay rises as the economy picks up momentum after a recession. Not this time. Employers don’t have to be generous in a weak job market because most workers don’t have anywhere to go.

As a result, pay raises haven’t kept up with even modest levels of inflation. Earnings for production and nonsupervisory workers — a category that covers about 80 percent of the private, nonfarm workforce — have risen just over 6.2 percent since June 2009. Consumer prices have risen nearly 7.2 percent. Adjusted for inflation, wages have fallen 0.8 percent. In the previous five recoveries —the records go back only to 1964 — real wages had gone up an average 1.5 percent at this point.

Falling wages haven’t hurt everyone. Lower labor costs helped push corporate profits to a record 10.6 percent of U.S. GDP in the first three months of 2012, according to the Federal Reserve Bank of St. Louis. And those surging profits helped lift the Dow Jones industrials 54 percent from the end of June 2009 to the end of last month. Only after the recessions of 1948-49 and 1953-54 did stocks rise more.

Stock investments may be coming back, but savings are still getting squeezed by the rock-bottom interest rates the Fed has engineered to boost the economy. The money Americans earn from interest payments fell from nearly $1.4 trillion in 2008 to barely $1 trillion last year — a drop of more than $370 billion, or 27 percent. That amounts to shrinking income for many retirees.

Washington isn’t doing much to help the economy. An impasse between Obama and congressional Republicans brought the U.S. to the brink of default on the federal debt last year —a confrontation that rattled financial markets and sapped consumer and business confidence.

Given the political divide, businesses and consumers don’t know what’s going to happen to taxes, government spending or regulation. Sharp tax increases and spending cuts are scheduled to kick in at year’s end unless Congress and the White House reach a budget deal.

In the meantime, it’s difficult for consumers to summon the confidence to spend and businesses the confidence to hire and expand. Never in the postwar period has there been so much uncertainty about what policymakers will do, says Steven Davis, an economist at the University of Chicago Booth School of Business: “No one is sure what will actually happen.”

As weak as this recovery is, it’s nothing like what the U.S. went through in the 1930s. The period known as the Great Depression actually included two severe recessions separated by a recovery that lasted from March 1933 until May 1937.

It’s tough to compare the current recovery with the 1933-37 version. Economic figures comparable to today’s go back only to the late 1940s. But calculations by economist Robert Coen, professor emeritus at Northwestern University, suggest that things were far bleaker during the recovery three-quarters of a century ago: Coen found that unemployment remained well above 10 percent — and usually above 15 percent — throughout the 1930s.

Only the approach and outbreak of World War II — the ultimate government stimulus program — restored the economy and the job market to full health.

Comparison of U.S. Recoveries from Recession

1949-2007

Real Gross Domest Product (GDP) Growth Rates

Background Articles and Videos

Did Mitt Romney Call President Obama A Liar?

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Current Population Survey

August 3, 2012

Employment from the BLS household and payroll surveys:

summary of recent trends

http://www.bls.gov/web/empsit/ces_cps_trends.pdf

Employment Situation Summary

Transmission of material in this release is embargoed                          USDL-12-1531
until 8:30 a.m. (EDT) Friday, August 3, 2012

Technical information:
 Household data:       (202) 691-6378  *  cpsinfo@bls.gov  *  www.bls.gov/cps
 Establishment data:   (202) 691-6555  *  cesinfo@bls.gov  *  www.bls.gov/ces

Media contact:         (202) 691-5902  *  PressOffice@bls.gov

                       THE EMPLOYMENT SITUATION -- JULY 2012

Total nonfarm payroll employment rose by 163,000 in July, and the unemployment rate
was essentially unchanged at 8.3 percent, the U.S. Bureau of Labor Statistics reported
today. Employment rose in professional and business services, food services and drinking
places, and manufacturing.

Household Survey Data

Both the number of unemployed persons (12.8 million) and the unemployment rate (8.3
percent) were essentially unchanged in July. Both measures have shown little movement
thus far in 2012. (See table A-1.)

Among the major worker groups, the unemployment rate for Hispanics (10.3 percent) edged
down in July, while the rates for adult men (7.7 percent), adult women (7.5 percent),
teenagers (23.8 percent), whites (7.4 percent), and blacks (14.1 percent) showed little
or no change. The jobless rate for Asians was 6.2 percent in July (not seasonally
adjusted), little changed from a year earlier. (See tables A-1, A-2, and A-3.)

In July, the number of long-term unemployed (those jobless for 27 weeks and over) was
little changed at 5.2 million. These individuals accounted for 40.7 percent of the
unemployed. (See table A-12.)

Both the civilian labor force participation rate, at 63.7 percent, and the employment-
population ratio, at 58.4 percent, changed little in July. (See table A-1.)

The number of persons employed part time for economic reasons (sometimes referred to as
involuntary part-time workers) was essentially unchanged at 8.2 million in July. These
individuals were working part time because their hours had been cut back or because
they were unable to find a full-time job. (See table A-8.)

In July, 2.5 million persons were marginally attached to the labor force, down from 2.8
million a year earlier. (These data are not seasonally adjusted.) These individuals were
not in the labor force, wanted and were available for work, and had looked for a job
sometime in the prior 12 months. They were not counted as unemployed because they had
not searched for work in the 4 weeks preceding the survey. (See table A-16.)

Among the marginally attached, there were 852,000 discouraged workers in July, a decline
of 267,000 from a year earlier. (These data are not seasonally adjusted.) Discouraged
workers are persons not currently looking for work because they believe no jobs are
available for them. The remaining 1.7 million persons marginally attached to the labor
force in July had not searched for work in the 4 weeks preceding the survey for reasons
such as school attendance or family responsibilities.

Establishment Survey Data

Total nonfarm payroll employment rose by 163,000 in July. Since the beginning of this
year, employment growth has averaged 151,000 per month, about the same as the average
monthly gain of 153,000 in 2011. In July, employment rose in professional and business
services, food services and drinking places, and manufacturing. (See table B-1.)

Employment in professional and business services increased by 49,000 in July. Computer
systems design added 7,000 jobs, and employment in temporary help services continued
to trend up (+14,000).

Within leisure and hospitality, employment in food services and drinking places rose by
29,000 over the month and by 292,000 over the past 12 months.

Manufacturing employment rose in July (+25,000), with nearly all of the increase in durable
goods manufacturing. Within durable goods, the motor vehicles and parts industry had fewer
seasonal layoffs than is typical for July, contributing to a seasonally adjusted employment
increase of 13,000. Employment continued to trend up in fabricated metal products (+5,000).

Employment continued to trend up in health care in July (+12,000), with over-the-month
gains in outpatient care centers (+4,000) and in hospitals (+5,000). Employment also
continued to trend up in wholesale trade.

Utilities employment declined in July (-8,000). The decrease reflects 8,500 utility workers
who were off payrolls due to a labor-management dispute.

Employment in other major industries, including mining and logging, construction, retail
trade, transportation and warehousing, financial activities, and government, showed little
or no change over the month.

The average workweek for all employees on private nonfarm payrolls was unchanged at
34.5 hours in July. Both the manufacturing workweek, at 40.7 hours, and factory overtime,
at 3.2 hours, were unchanged over the month. The average workweek for production and
nonsupervisory employees on private nonfarm payrolls was unchanged at 33.7 hours. (See
tables B-2 and B-7.)

In July, average hourly earnings for all employees on private nonfarm payrolls edged up 
by 2 cents to $23.52. Over the year, average hourly earnings rose by 1.7 percent. In July,
average hourly earnings of private-sector production and nonsupervisory employees increased
by 2 cents to $19.77. (See tables B-3 and B-8.)

The change in total nonfarm payroll employment for May was revised from +77,000 to +87,000,
and the change for June was revised from +80,000 to +64,000.

_____________
The Employment Situation for August is scheduled to be released on Friday, September 7, 2012,
at 8:30 a.m. (EDT).

Glenn Hubbard: The Romney Plan for Economic Recovery

Tax cuts, spending restraint and repeal of Obama’s regulatory excesses would mean 12 million new jobs in his first term alone

By Glenn Hubbard

“…We are currently in the most anemic economic recovery in the memory of most Americans. Declining consumer sentiment and business concerns over policy uncertainty weigh on the minds of all of us. We must fix our economy’s growth and jobs machine.

We can do this. The U.S. economy has the talent, ideas, energy and capital for the robust economic growth that has characterized much of America’s experience in our lifetimes. Our standard of living and the nation’s standing as a world power depend on restoring that growth.

But to do so we must have vastly different policies aimed at stopping runaway federal spending and debt, reforming our tax code and entitlement programs, and scaling back costly regulations. Those policies cannot be found in the president’s proposals. They are, however, the core of Gov. Mitt Romney’s plan for economic recovery and renewal.

In response to the recession, the Obama administration chose to emphasize costly, short-term fixes—ineffective stimulus programs, myriad housing programs that went nowhere, and a rush to invest in “green” companies.

As a consequence, uncertainty over policy—particularly over tax and regulatory policy—slowed the recovery and limited job creation. One recent study by Scott Baker and Nicholas Bloom of Stanford University and Steven Davis of the University of Chicago found that this uncertainty reduced GDP by 1.4% in 2011 alone, and that returning to pre-crisis levels of uncertainty would add about 2.3 million jobs in just 18 months.

The Obama administration’s attempted short-term fixes, even with unprecedented monetary easing by the Federal Reserve, produced average GDP growth of just 2.2% over the past three years, and the consensus outlook appears no better for the year ahead.

Moreover, the Obama administration’s large and sustained increases in debt raise the specter of another financial crisis and large future tax increases, further chilling business investment and job creation. A recent study by Ernst & Young finds that the administration’s proposal to increase marginal tax rates on the wage, dividend and capital-gain income of upper-income Americans would reduce GDP by 1.3% (or $200 billion per year), kill 710,000 jobs, depress investment by 2.4%, and reduce wages and living standards by 1.8%. And according to the Congressional Budget Office, the large deficits codified in the president’s budget would reduce GDP during 2018-2022 by between 0.5% and 2.2% compared to what would occur under current law.

President Obama has ignored or dismissed proposals that would address our anti-competitive tax code and unsustainable trajectory of federal debt—including his own bipartisan National Commission on Fiscal Responsibility and Reform—and submitted no plan for entitlement reform. In February, Treasury Secretary Tim Geithner famously told congressional Republicans that this administration was putting forth no plan, but “we know we don’t like yours.”

Other needed reforms would emphasize opening global markets for U.S. goods and services—but the president has made no contribution to the global trade agenda, while being dragged to the support of individual trade agreements only recently.

The president’s choices cannot be ascribed to a political tug of war with Republicans in Congress. He and Democratic congressional majorities had two years to tackle any priority they chose. They chose not growth and jobs but regulatory expansion. The Patient Protection and Affordable Care Act raised taxes, unleashed significant new spending, and raised hiring costs for workers. The Dodd-Frank Act missed the mark on housing and “too-big-to-fail” financial institutions but raised financing costs for households and small and mid-size businesses.

These economic errors and policy choices have consequences—record high long-term unemployment and growing ranks of discouraged workers. Sadly, at the present rate of job creation and projected labor-force growth, the nation will never return to full employment.

It doesn’t have to be this way. The Romney economic plan would fundamentally change the direction of policy to increase GDP and job creation now and going forward. The governor’s plan puts growth and recovery first, and it stands on four main pillars:

Stop runaway federal spending and debt. The governor’s plan would reduce federal spending as a share of GDP to 20%—its pre-crisis average—by 2016. This would dramatically reduce policy uncertainty over the need for future tax increases, thus increasing business and consumer confidence.

Reform the nation’s tax code to increase growth and job creation. The Romney plan would reduce individual marginal income tax rates across the board by 20%, while keeping current low tax rates on dividends and capital gains. The governor would also reduce the corporate income tax rate—the highest in the world—to 25%. In addition, he would broaden the tax base to ensure that tax reform is revenue-neutral.

Reform entitlement programs to ensure their viability. The Romney plan would gradually reduce growth in Social Security and Medicare benefits for more affluent seniors and give more choice in Medicare programs and benefits to improve value in health-care spending. It would also block grant the Medicaid program to states to enable experimentation that might better serve recipients.

Make growth and cost-benefit analysis important features of regulation. The governor’s plan would remove regulatory impediments to energy production and innovation that raise costs to consumers and limit new job creation. He would also work with Congress toward repealing and replacing the costly and burdensome Dodd–Frank legislation and the Patient Protection and Affordable Care Act. The Romney alternatives will emphasize better financial regulation and market-oriented, patient-centered health-care reform.

In contrast to the sclerosis and joblessness of the past three years, the Romney plan offers an economic U-turn in ideas and choices. When bolstered by sound trade, education, energy and monetary policy, the Romney reform program is expected by the governor’s economic advisers to increase GDP growth by between 0.5% and 1% per year over the next decade. It should also speed up the current recovery, enabling the private sector to create 200,000 to 300,000 jobs per month, or about 12 million new jobs in a Romney first term, and millions more after that due to the plan’s long-run growth effects.

But these gains aren’t just about numbers, as important as those numbers are. The Romney approach will restore confidence in America’s economic future and make America once again a place to invest and grow.

Mr. Hubbard, dean of Columbia Business School, was chairman of the Council of Economic Advisers under President George W. Bush. He is an economic adviser to Gov. Romney. …”

http://online.wsj.com/article/SB10000872396390443687504577562842656362660.html

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