1sunfight’s Weblog

April 4, 2010

Turning the Corner?

Filed under: Economics,GOP,Obama,politics,Uncategorized — Julie P @ 12:35 am
Tags: , , , , ,

The United States has been in recession since December of 2007, with noticeable job losses starting in May of 2008, reaching their crescendo in May of the following year, and trickling less and less as the year ebbs on.  In that time I was one of the people who lost their job, so it is no wonder that I take special interest every month when the jobless numbers and unemployment rate.   The jobs report came out on Friday for the month of March.  It was much anticipated that the figures would be good as we climb out of the worst recession since the Great Depression.

Leading up to my job loss was the real estate crisis, the Wall St. meltdown, subsequently followed with a two part bank bailout, presidential election, that saw a lame duck president choose to do nothing once the election was determined, thus exacerbating the situation, and finally, a new president was sworn in four months after the Wall St meltdown along with a new congress that gave Democrats complete control of both ends of Pennsylvanian Avenue.   Job losses were the steepest last winter and spring as I watched for four months starting in January; hundreds of thousands of people month after month lose their jobs. To me it was, and still is, more than a crisis, many of those people are my competition for my next job.  In my mind, the fewer people out of the work the more opportunity there is for me to get a job.  The jobs report came out and I paid attention.

The nation has an unemployment rate of 9.7%, which is not the highest it has ever been, but it is not good.  The state of Georgia has an unemployment rate of 10.5 %, with the city of Atlanta at 10.8%.  Why so high and why so persistent?  I looked back over the last decade and can easily see the reasons as to why and even why so persistent.  The last decade, most of which was under George W. Bush’s watch,  saw the weakest GDP growth in seventy years, with job growth that matched, both were just over 2%.  What fueled that growth were the interrelated booms in consumer spending, real estate and financial markets while simultaneously household saw incomes grow very slowly.  It was unsustainable.  There was no saving and export led growth that would have been sustainable and probably more resilient in a recession.  Eight years of a do nothing president beyond spending money on a war he lied to get us into, and economic policies that just did not work, brought us to the edge of complete collapse, something that could still happen.  We are not out of the woods completely yet.  In order to move ahead we must come to terms with this one simple truth that all presidents and the nation must accept, although one party just refuses to accept this, this time around and that is:

A president who needs to correct the failed economic policies of a predecessor will have more difficulty obtaining very low unemployment, so the degree of improvement over the previous administration is an important measure of success.

One party sees this as blame.  It is not blame, it is hard truth.  It is accepting that this is the fundamental problem that a year of time is not going to fix.  Yes, the unemployment rate is high and persistently so, but this is the reason.  George W. Bush saw a net job gain of just over three million jobs in his eight years in office.  We have lost 8.2 million jobs in the last two years, which means jobs lost include some of the six million plus jobs created under former president Bill Clinton.  That is really scary.  Two consecutive administrations created roughly ten million jobs and in two years eighty percent of those jobs have vanished.  President Obama may not just be shepherding us through the Great Recession, he may be shepherding us through the reprise of the Great Depression.

I am going to point something out about the total number people who are currently out of work in the United States, the cyclical unemployment rate, and structural unemployment rate.  Currently there are fifteen million people out of work; half of those people are the cyclically unemployed at 9.7%, the other half are the structurally unemployed.  The unemployment rate when the United States is considered to be at full employment is 5 percent and less, which means there are always about seven and a half million not working all of the time, also known as, the structurally unemployed.  It looks like a big figure, but the United States is the third most populous nation on earth with over three hundred million living here.

Okay, so I live in Atlanta where the unemployment rate is much higher than the national average and is expected to be one of the last areas to recover from this economic downturn.    Atlanta’s growth in the last decade was based on consumer spending, malls are over the place – shopping is a past time – real estate, and banking.  The state of Georgia has had the most bank failures in the nation at forty one of the 165 bank failures in the two year recession.  Atlanta does not have an industrial base to help lead the city out of this recession, although Atlanta never has had heavy industry.  Atlanta has, in the twenty three years I have lived here, has always been all about shopping, and malls, McMansions, urban sprawl, and making money.  It is not all gloom and doom for Atlanta, without going into the deatil, city is growing into the next Silicon Valley.  Atlanta’s future is technology and as I look for work I can see that it is.  This is a good thing to add to the portfolio.  Additionally, even with the gloom and doom, my phone is ringing for job interviews; most in the tech sector, one of which I have a face to face interview with on Monday, be it a million miles from where I live.  I also am waiting on huge business to get back with on when they plan on interviewing me for an open position there.  I hope to be back to work after this week, or very, very soon

So, I saw the jobs report come out and I wanted to know what was going on.  The United States gained 162,000 jobs.  42,000 of those jobs are temporary census workers for the 2010 census, so I am going to throw those out since the jobs will vanish for another ten years once the census is over.  So there have been a total of 120,000 jobs added.  Regular temp services added 40,000 jobs, which is a good thing.  At the start of any recession temp workers are the first to go, but are among the first to return as businesses test the recovery waters.  All job sectors either saw job gains, or remained flat, with only two sectors, finance and insurance, lost jobs.  Another indicator that the economy is starting to recover is that the number of hours worked is increasing too, instead of having hours cut, which what happens at the start of any recession.  If memory serves me correctly, that was about a three percent GDP gain for this reporting period.

This is a good start, but I am not going to fool myself.  This is just that, a start.  The unemployment rate is not expected to fall until sometime next year, with projections of it falling to 7.5% by 2012 and that it may be a total of five years from now before everyone is put back to work, although Ronald Reagan experienced the same thing.  Unemployment did not come to full employment until 15 months before his last term in office.

Of course, the Republican Party is foaming at the mouth angry over this jobs report.  It is astonishing how angry they are.  Frankly, it is unreasonably angry and angry enough for me to say this is more than about losing the health care debate, which is fueling their rage in a big way.  It is more than justified anger over a persistently high unemployment.  However, I believe that reason is another blog entry for another day.

This is a good jobs report; we just need see more of them for some time to come.

Obama, GOP spar over new jobs figures

Economy Made Few Gains in Bush Years

Bureau of Labor Statics Jobs Report

Job Market Picks Up, but Slowly

Tallying Presidential Success

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