Is the recession over yet? – II

“What is the use of living, if it be not to strive for noble causes and to make this muddled world a better place for those who will live in it after we are gone?” — Winston Churchill

Statisticians say the recession ended mid-2009, four and a half years ago. But what do you think? Does it feel like the recession ended or does it feel like we are still in a recession? In a recent poll, 74% said we are still in a recession.

It’s no wonder most people feel that the recession never ended. Employment is miserable. GDP growth is pathetic. Median family income is down for four straight years. Almost 50 million Americans live below the federal poverty line. A record 47 million people are on food stamps. One pundit declared that “More people in the United States are poor, unemployed, underemployed, looking for work, disgusted and quit looking for work, on food stamps, and on disability than anytime in our history.”

If those words look familiar it is because I first wrote them three months ago. In that column, the focus was on the worst employment picture in more than 30 years. Three recent pieces of economic news make this a good time to look more broadly at the economy.

1) On April 22, the New York Times reported that the U.S. no longer has the highest Median Family Income in the world. Canada is now #1.
2) April 30, the headline news was that in the first quarter of 2014, the U.S. economy grew at an almost non-existent rate of 0.1%.
3) That same day other headlines stated that China would soon pass the U.S. as the world’s largest economy.

Our economy stinks and we will have more such headlines if we don’t fix it. So, how do we fix it? The first step is to replace all the politicians who don’t even realize there is a problem, who do the same wrong things year after year expecting different results.

For decades, probably for more than a century, the U.S. has had the richest middle class in the world. Not just the richest middle class, but also the richest lower class, the richest upper class, and even the richest poor people. Those in the bottom 10% were much better off than the bottom 10% in any other country.

U.S. median family income is now down for five years in a row. In Canada, median family income is up for four of the last five years. Is it pure coincidence that Canada has been governed by Conservatives in recent years, the U.S. by Progressives?

The Index of Economic Freedom is an annual scoring of some 180 nations by ten measures of economic freedom. As the Index states, “The ideals of economic freedom are strongly associated with healthier societies, cleaner environments, greater per capita wealth, human development, democracy, and poverty elimination.”

The U.S. was rated economically “free” in 2006. Since then, its freedom score has dropped 6 points, it has fallen out of the top 10 to now #12 and is ranked only “mostly free”. The U.S. has lost economic freedom for seven years in a row, particularly in the areas of property rights, and freedom from corruption.

Conversely, Canada has increased its freedom score by more than 10 points over the last 20 years. It is currently ranked #6, and is rated “free”.

Hmm, is there a pattern here? The U.S. loses economic freedom seven years in a row and median family income goes down for five years in a row. Canada increases its economic freedom and median family income goes up four of the last five years. It now has the world’s highest median family income.

GDP growth in this so-called “recovery” has been pathetic. For four years it has been around 1.5% to 2%. That is the slowest by far of all the recoveries in 65 years. The Federal Reserve Bank of Minneapolis has a nice interactive chart of all postwar recoveries. The current recovery amounts to merely an 11.1% increase in GDP over the almost five years since the recovery began. Many of the previous recoveries had double or almost triple that growth. This recovery is barely half the average of the ten previous recoveries.

Imagine if we had had as much as average growth in the last five years. Investor’s Business Daily estimates that we would now have $1.3 trillion higher income. That is about $10,000 higher per household. That is the cost of bad economic policies.

Apologists for the Obama “recovery” say that the recession was especially severe. Historically, the more severe the recession, the stronger the recovery. It should have been easy to produce better than average numbers. They now say that financial recessions take longer to recover. But that’s not what they said back in 2009 and into 2010. Back then they forecast a strong recovery. It was only after their economic plans failed that they started spouting the “financial recession” excuse.

The Democrat Party would be wise to heed the words of one of its Presidential candidates from some 20 years ago, the late Senator Paul Tsongas, who said, “You cannot redistribute wealth that you never created. You cannot be pro-jobs and anti-business at the same time. You cannot love employment and hate employers.”

Advertisements

Is the recession over yet?

“Be thankful we’re not getting all the government we’re paying for.” — Will Rogers

Statisticians say the recession ended mid-2009, four and a half years ago. But what do you think? Does it feel like the recession ended or does it feel like we are still in a recession? In a recent poll, 74% said we are still in a recession.

It’s no wonder most people feel that the recession never ended. Employment is miserable. GDP growth is pathetic. Median family income is down for four straight years. Almost 50 million Americans live below the federal poverty line. A record 47 million people are on food stamps. One pundit declared that “More people in the United States are poor, unemployed, underemployed, looking for work, disgusted and quit looking for work, on food stamps, and on disability than anytime in our history.”

But the December jobs report says that unemployment dropped from 7.0% down to 6.7%. Doesn’t that show that the economy is improving? Well, no. Almost all of the reaction, other than from hopelessly partisan hacks, says that the report is bad news. E.g. CNN described it as “weakest job growth in years”, USAToday referred to it as “unexpectedly weak jobs report”. Many reported that there were “only” or “just” 74,000 new jobs, the worst in almost a year. (UPDATE: The January Jobs Report is better but “is another disappointing jobs report”. “Job growth remains weak,” “disappoints again”.)

Not so well known is that jobs have to increase by about 150,000 every month just to keep up with the increase in population. Since 2009, when the recession supposedly ended, the civilian population age 16 and above has grown from 236 million to 246 million. Meanwhile, the number who were employed grew from 140 million to 144 million. In other words, of the 10 million who entered the working age population, only 4 million found a job.

Compare the current “recovery” with two others. From 1983 to 1987, population grew by almost 9 million; jobs by almost 12 million. From 1993 to 1997, population grew by a bit over 8 million, jobs a bit over 9 million. Those were strong recoveries – employment grew even faster than population. In the eleven recoveries since they started collecting statistics in 1948, the current recovery is by far the weakest and slowest.

US News magazine has a fascinating chart from the Federal Reserve of St. Louis. It shows both the unemployment rate and the EMployment rate from 1948 through 2013. They show the data for employment and unemployment separately because the two are calculated differently. But for more than 60 years, covering 10 recessions, employment and unemployment are mirror images of each other. When employment goes up, unemployment goes down and vice versa.

This time is different. For the first time in the history of these employment statistics, employment is NOT moving up. By the government calculations, unemployment has improved but employment as a percentage of the population has held steady for four years at a level much worse than we have seen for 30 years.

employment to population

But how can unemployment go down without employment going up? If you stop being unemployed doesn’t that mean you are employed? Well, no. Many people are not counted as either employed or unemployed; they are counted as “Not in labor force”. If you have been unemployed for so long that you give up looking, then you stop being counted as unemployed, and are instead counted as no longer in the labor force.

A record high 92 million people are counted as no longer in the labor force, an increase of 10 million in just 4 years. Some people will say that it is because baby boomers are retiring. That’s a nice theory but the numbers say otherwise. Those aged 55 and above have actually seen their employment numbers grow by 6 million people. It is the younger workers from 16-54 who have lost jobs – 8 million jobs.

In the four years of the current “recovery” the number of Millennials working full-time has decreased every year. The number living at home with their parents has grown every year. This is a human tragedy.

On top of all the ongoing poor employment numbers, the non-partisan Congressional Budget Office (CBO) recently estimated that ObamaCare will cost 2.3 million jobs by 2021. Apologists quickly countered that it would not be because people lost their jobs; rather it would be because people decided not to work. “When Americans quit looking for work because they conclude not working beats working, America faces a significant problem” says a white paper from Express Employment Professionals.

Some say that were are in a “New normal”. Many of us – I hope most of us – do not believe in a “fate that will fall on us no matter what we do.” For most of its existence, the United States has been the freest, most prosperous nation on earth. It is long established that freedom and prosperity go hand in hand; more freedom produces greater prosperity.

Sadly, the U.S. has moved away from freedom to a more and more intrusive government. The Index of Economic Freedom reported just last month that “The U.S. is the only country to have recorded a loss of economic freedom each of the past seven years.” Hmm, could that explain the awful employment?

Obamacare alone didn’t sink Obama

Obama’s approval ratings are about the lowest of all recent presidents; 55% disapprove. Much is due to ObamaCare, but Jennifer Rubin identifies many other reasons:
  • Obama managed to get rid of only a sliver of the Bush tax cuts, to the dismay of liberals.
  • He falsely predicted a catastrophe if the sequester occurred.
  • He pleaded ignorance to scandals involving the Internal Revenue Service and spying on reporters.
  • His erratic behavior on Syria and dangerous appeasement of Iran rattled Congress, our allies and the American people (who now give him negative reviews on foreign policy).
  • The vast majority of Americans (79 percent in the Post/ABC poll) still think we are in a recession and a plurality (45 percent) trust Congress more than the president to fix it.

Obama has lost support among many of his key constituencies including Hispanics, women, self-described liberals, and young voters.

“It’s been a long, disappointing year for many of President Obama’s most ardent supporters,” a dispirited Liz Halloran writes for NPR. “From drones and Syria, to immigration and the Keystone XL pipeline, the list of issues on which the president has induced frustration and disillusionment is not a short one.”

Poll: America’s best days are in the past

More than half (52%) of likely voters think the nation’s best days are in the past. Only 31% think the best days lie still ahead. — Rasmussen Reports

It is understandable that so many people think that. But they are wrong. The economy does stink. We are in the worst, most prolonged recovery in 70 years. Unemployment is awful. Millions of people have given up even looking for a job. Median family income is down. Debt is up. Growth is down.

But these bad things don’t just happen. They are the result of bad policies from politicians who do not understand the Law of Unintended Consequences, who do not understand that good intentions are not the same as good results.

The right policies can put us back on the right track to growth and prosperity. Most people think the country is headed the wrong direction. We need to elect politicians who agree with us, who know that we are on the wrong track and that we need to change direction. 

 

Goodbye Full-Time Jobs, Hello Part-Time Jobs, R.I.P. Middle Class

That headline (credit Michael Snyder) is a good summary of the June job report. Another good summary is this tweet from David Burge (Iowahawk):

Unemployment report in a nutshell: the Taco Bell that had 30 40 hour workers now has 40 30 hour workers.

Part-time work surged to an all-time high of 28 million. But full-time work lost 240,000 jobs. It is now 6 million below the all-time high set in 2007. The second largest employer in the country (behind only Walmart) is now the temp agency, Kelly Services.

More employment numbers from James Pethokoukis:

  • Wow, the U-6 rate (unemployed, discouraged, underemployed) surges to 14.3% from 13.8%
  • Obamacare? | Those employed part time for economic reasons increased by 322,000 to 8.2 million in June
  • 11.1%: What the US jobless rate would be if labor force participation were back to pre-recession levels
  • But using Goldman Sachs estimates that subtract demographics, 9.1% rate is more in the ballpark

 

Down in Concord

“Just because you do not take an interest in politics doesn’t mean politics won’t take an interest in you.” — Pericles (430 B.C.)

Down in Concord it is another quiet week. There are 47 bills with public hearings in the House or in the Senate. Most probably are not interesting to most people. I found four that are mildly interesting.

On Tuesday morning, the Senate has public hearings on two firearms bills. HB 135 restricts your right to defend yourself, your family, and your community. It says that if someone attacks you with deadly force, you may not use deadly force to defend yourself, if you can run away. So if you or your daughter is a young nurse walking through a dark parking lot, and a would-be rapist pulls out a knife, you should try to run away instead of pulling out your pistol. I expect a large crowd to oppose the bill.

The second firearms bill is HB 388, which says that if a thief steals a weapon from your house, you are not responsible for any damage the bad guy does with your weapon. That bill passed with a strong bipartisan vote in the House. The crowd on hand to oppose HB 135 probably will stay to support HB 388

Wednesday the Senate hears HB 595, which would repeal changes to photo identification requirements of voters that was passed just last year. By wide margins, voters approve of the requirement for a photo ID, so there might be a good crowd opposing this repeal bill.

Thursday the House Fish&Game committee will hold a public hearing on SB 122, establishing a commercial shrimp license. We have survived all these many years without needing a shrimp license. Thursday we will learn why some people think we really need yet another license.

…..

Some time ago a friend asked why I spend time on politics. Well, the fact is that politicians can have an enormous impact on our well-being. It’s not so much that they can do good but that they can do great harm. As Walter Williams puts it, “In general, presidents and congressmen have very limited power to do good for the economy and awesome power to do bad. The best good thing that politicians can do for the economy is to stop doing bad. In part, this can be achieved through reducing taxes and economic regulation, and staying out of our lives.”

A report from the government’s Small Business Administration estimates that the cost of federal regulations is $1.75 trillion. That works out to about $15,000 per family. Are you getting your money’s worth?

It wasn’t regulations that made us the greatest country on earth. It was freedom – the freedom for ordinary people to do extraordinary things. Henry Ford, the Wright Brothers, and Steve Jobs created entire industries that provided good jobs for tens of millions of people.

Today there are so many regulations that FedEx could not get off the groundSubway RestaurantsHome Depot, Whole Foods, and Wynn casinos might not exist at all if they had started in today’s regulatory environment.

Together these companies have over 800,000 employees. How much worse would our economy be without those jobs? without the goods and services they produce? How many of tomorrow’s giant companies are being killed today by excessive regulations?

An old American adage declares that “To err is human, but it takes a politician to really screw things up.” They certainly have screwed things up. The latest jobs report was just one more example. Almost half a million people gave up looking for a job. The labor force participation rate is the lowest since 1979.

Poverty is the worst since the mid-1960s. The number of people collecting food stamps is at record high levels. Median family income is down for four straight years.

The current so-called recovery is the worst in 70 years. Per capita income and employment are lower than they were at the start of the recession. If this economy had been merely average, we would now have a GDP per person more than $4500 higher and we would see more than 14 million more people employed.

Why do I spend time on politics? Because it matters. Bad economic policies produce the conditions we now suffer. Good policies produce growing economies.

Canada’s conservative government adopted principles of lower taxes, smaller government, and more decentralization of federal government powers. For the first time in history, the average Canadian is wealthier than the average American.

There is one set of economic policies that has worked every time it has been tried. Year after year, around the world, among the fifty states, one simple policy has produced greater prosperity, better life expectancy, a cleaner environment, and more human rights.

That policy is economic freedom.

That is not just theory or ideology; that is history. Nearly 20 years of analyzing 183 countries has consistently shown that more freedom produces higher per capita income, longer lifespans, and more “happiness”.

Sadly, the United States’ rank in the Index  of Economic Freedom has dropped every year since 2006. We have fallen from “Free” to “Mostly Free”.

For a better economy, we need to elect politicians who support property rights, limited government, less regulating, and free markets. It works every time it is tried.