Friday, January 04, 2013

Hope You're Enjoying the Obamanomics Boom

Another month, another pathetic jobs number. Employers added just 155,000 jobs in December*.

As this famous (and updated) chart shows, the administration's predictions about job growth were way off.

Jim Pethokoukis explains that some economists were thinking (hoping) December's numbers might be a pleasant surprise. But,
It didn’t happen.

Instead it was same old, same old. The increase in total nonfarm payroll employment was only a smidgen better than the average 2012 employment growth of 153,000 jobs per month. And that was exactly the same as the average monthly gain for 2011. And at that pace, the US won’t return to pre-Great Recession employment levels until after 2025, according to the Jobs Gap calculator from the Hamilton Project.
This is a very depressing thought - the idea that a child born at the beginning of the recession might be in college before there are as many Americans working as there were when she was born.

Now let me depress you even more.

Take a look at these two charts from the left-wing Center for Budget and Policy Priorities.

The worst news of all in this month's (and previous months') job numbers isn't that we're experiencing a very weak recovery. Normally, after a recession the economy enters a period of fast growth - in output and jobs. The charts for new jobs and economic growth during the recovery ramp up steeply before falling back down a little and leveling off.

As these charts demonstrate, our ramping up period is over and has been for some time. The worst news isn't that we're suffering a weak recovery. The worst news of all is that we have recovered and what we're experiencing now is the boom following the recovery. And this is all there is, folks.

In the era of Obamanomics this is the new normal. Check that, this isn't the normal, this is the best we can hope for. Whereas in the recoveries following past recessions we would have 4% or 5% or higher GDP growth (the economy grew by over 7% in one year during Reagan's first term) and a flurry of new job creation until unemployment leveled off at or 5.5% or 5% or even lower and the U.S. would average 3+% annual economic growth.

No more.

Instead of averaging that, we can't even get there in a good year. 150,000 jobs per month, nearly 8% unemployment and 1.5% - 2% economic growth per year are the new boom times.

It's not that it might take a year or two past 2025 to see employment levels return to pre-Great Recession levels. It's that expecting the job growth numbers required to do that might be too optimistic.

Welcome to the Obamanomics boom.

(You may have noticed that the CBPP post presents an argument at the end about the success of the stimulus using Congressional Budget Office estimates for unemployment without the stimulus compared to actual rates. Other than to compare the Obama administration's predictions of the success of the stimulus with reality, I didn't address that part of the post. For a counter to that argument, go here. However, if you're going to accept the CBO's estimates as gospel, then the future is even more bleak than I've described.)

* - But not me, maybe in January.

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