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06 October 2012

Glacial Obama Jobs Growth Will Take a Complete Generation to Return to 5% Missing Jobs

The September employment numbers from the Bureau of Labor Statistics indicate a glacial increase in employment.  The Obama jobs recovery over the last two years is at a rate adequate to return the U.S. to a real 5% rate of missing jobs in 18.5 years!  Add this to the four years under his presidency so far with awful unemployment and a complete generation will have passed before we return to a real 5% unemployment rate.  The real unemployment rate now is 12.88% and in September 2010 it was 13.73%.  The real rate of jobs growth under Obama in the last two years is at a rate of 0.425% a year.  Thus, to go from 12.88% missing jobs to 5.00% missing jobs will take (12.88% - 5.00%)/(0.425%/yr.) = 18.54yr.  Add the almost four years of the Obama presidency to this and one has a complete generation mired in a very sorry jobs economy.

Of course, Obama is presently holding back on many of the jobs-killing policies he wants to implement after he is re-elected.  These will likely wipe out the meager jobs growth we are presently seeing.  We also have to remember that the Federal Reserve is pouring $40 billion a month into the economy now, which should be able to purchase a few jobs upon the first pulse of that money surge.

The number of missing jobs and the real unemployment rate are given in the table below using the BLS Household Survey Data without seasonal adjustments:

The classical unemployment rate has fallen considerably, but it is substantially due to people quitting their job search.  The working age and available population increased from August to September by 206,000 people.  The number employed increased by 775,000 according to these Obama administration BLS numbers, though given the state of the economy, I find that number rather difficult to believe.  Unless, there are a lot of small business people out there who decided in September that Obama was not going to be re-elected and they are hiring on that belief!

Looking at the numbers of people unemployed, we see an even bigger decrease of 954,000 people.  If we assume that none of the 206,000 new working age people wanted jobs and 775,000 of the officially recognized unemployed found jobs, then another 179,000 people gave up looking for a job.  Does it not seem very unlikely that if 775,000 found a job in one month, that 179,000 who had just been looking for work would choose that time to stop looking for work?  There is something rather out of kilter in these numbers.  It may be that a lot more people really stopped looking for a job and decided they were by default self-employed.  These days, many of the self-employed are not able to pay themselves a salary.

But even if we use these numbers, there are 21,189,000 missing jobs now.  This is more missing jobs than were missing in September 2010!  Thanks to the population growth, the percentage of missing jobs has come down slightly though as noted above.  Here is the missing jobs chart:

Obviously the missing jobs chart does not show any major breakout in the rate of jobs creation once again in the last two and half years.

But, there may have been some jobs growth due to the decrease in savings rate and the increase in spending of Americans over the last two months.  A good part of that spending increase went to pay for higher gasoline prices, however.  The Economic Confidence Index improved in August, though many more Americans are still pessimistic about the economy than are optimistic.  The Institute for Supply Management Manufacturing Index rose to 51.5 in September from 49.6 in August, indicating expansion for the first month since May.  This expansion is based on the American economy alone, since world trade is decreasing.  Europe is importing less and while China is claiming to have a GDP growth rate of 7.5%, its real growth rate is about zero.  The service sector has been expanding all year, though it did the same in 2011.  In September, it was at 55.1 up from 53.7 in August.  Some of this service sector expansion is likely to have been generated by that $40 billion pumped into the economy in September by the Federal Reserve.  Mortgage rates have continued to fall as well and are now averaging 3.36% for a 30-year mortgage.  While mortgages are still hard to get, home sales have increased slightly.

I cannot see any reason whatsoever to give Obama any credit for the slight improvement implied by the latest jobs report, however.  We should long ago have had much better jobs growth.  Obama has worked overtime to cut down the U.S. economy with his wrongheaded economic policies.  The 1.3% GDP growth claimed in the second quarter is surely a zero or negative growth rate in terms of real real per capita GDP.  The cost of living index being used by the government understates our real cost of living so that the real GDP growth is overstated.  The adjustment for per capita GDP means that a 1% growth in GDP is just that due to the population growing at a 1% rate a year.  GDP has to grow faster than 1% so that our average standard of living will not fall.

The slightly higher 1.6% growth rate of GDP for the first half of the year is likely about a zero real real per capita growth rate.  This is a highly stagnant economy.  When Obama tries to brag about it and claim he is responsible for it, he is just showing his ignorance of the economy.  We do not have to share that ignorance.  If enough people do and he is re-elected, we will not see any significant improvement in the economy over the next four years.  His plan to increase taxes by another $1 trillion and to implement ObamaUncaringTax will be a great kick to the head for the economy.  Who knows how much more damage he will do as the rules for Dodd-Frank financial industry regulations are fixed or left unfixed so that no one can safely undertake any significant financial activity.  He is also about to march his EPA brown shirts out to strangle all coal-fired power plants and he will take more actions to generally impede the use of fossil fuels.  Of course, he will also continue the mal-investment of our tax money in impractical green energy schemes doomed to failure and run by his parasitic campaign donors.

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