The Democrats Are Toast November 6, 2010Posted by Michael in Economics, Politics.
Even if Obama wins a second term, by the time he leaves office the economy, as measured by employment (non-farm payrolls) will be substantially worse than when the recession started. This fate is already inevitable. Politically, his goose is cooked, along with the rest of the Democrats. The Democrats can (and will) blame Bush for the recession. They can’t escape the fact that they botched the recovery.
The chart below shows why. The blue area represents the cumulative monthly job loss since the recession started in December, 2007 (before Obama took office), using actual data to the present, and then projecting that we return to “normal” employment by the time he leaves office. The green line shows average labor force growth of 90,000 jobs per month.
The slope of the red line is the Democrat-killer. It takes 230,00 jobs per month to break even assuming a static labor force, and 90,000 more to accommodate labor force growth. In other words, for Obama (and the Democrat Senate) to get back to normal by the end of 2016, he needs to enact policies that create more than 310,000 jobs per month starting right now. His presidency just gets worse every month he falls short of that goal.
[Click on charts to enlarge.]
via zero hedge.
Is there any chance he can pull this off?
Long story short — no. This is why I’m sort of happy that the Dems kept control of the Senate. It’s not even remotely possible that they can get close to this target, given the structural problems with our economy. So this fiasco is going to be on their nickel. It’s going to take a long time for Americans to repair their personal and public balance sheets. Certainly there is no hope of improvement as long as Obama keeps reading Paul Krugman columns. When Obama leaves office, even after a second term, people will still be pining for the Clinton-Bush years.
The chart below shows the actual job growth record during the recession from January 2008 through October 2010 (red=Bush, blue=Obama). Keep in mind that employment is a lagging indicator — it follows economic growth. The recession was officially over in June of 2009. You will immediately notice that the employment recovery under Obama has been incredibly anemic by historic standards, and completely stalled last summer. The “recovery summer” predicted by Sheriff Joe Biden, when all those shovel-ready infrastructure jobs would finally start digging, just did not happen.
October was actually a pretty good month for Obama, but we only added 151,000 jobs, about half of the target he has to hit in order to get that car out of the ditch in the next six years.
via Washington Monthly.
Here’s the same chart for private sector jobs — the jobs that really matter. It omits the bulge caused by the census workers earlier this year, as well as the recent loss of state and local public sector jobs (which is probably a good thing).
If Obama continues to have pretty good months like October, the recovery could take 20 years.
Data from the Bureau of Labor Statistics indicated that jobs growth in the private sector climbed by 159,000, a faster pace than in recent months. Overall, nonfarm payroll employment rose by 151,000 in October.
However, Heidi Shierholz, an economist at The Economic Policy Institute, notes that given the backlog of 14.8 million unemployed workers in the U.S., at October’s rate of job growth it would take another 20 years to bring the unemployment rate back down to the 5 percent level of December 2007 (at the onset of the recession).
Shierholz also cited that the workforce dropped by 254,000 in October, pushing the labor force participation rate down to 64.5 percent, well below its prerecession level of 66.0 percent in December 2007.
What do you think the odds are that our Community Organizer In Chief is really going to figure out how to get government out of the way and let the private sector grow the economy any faster than that? You are right — the probability of that happening is zero.
There has been speculation in some circles that Obama will not run for reelection. Who knows what he is thinking? If I were in his shoes, I would pull an LBJ and bail.