Modern Depression

Over the past month, supporters of the President have developed an oft-repeated narrative that claims that the administration has “created 2.1 million jobs” over the past 30 months. Like many claims that come from this administration, this claim is highly questionable.

Mort Zuckerman provides more honest (and gloomy) economic numbers:

In the face of the most stimulative fiscal and monetary policies in our history [almost 1 trillion dollars in administration spending], we have experienced the loss of over 7 million jobs, wiping out every job gained since the year 2000. From the moment the Obama administration came into office, there have been no net increases in full-time jobs, only in part-time jobs. This is contrary to all previous recessions. Employers are not recalling the workers they laid off from full-time employment.

The real job losses are greater than the estimate of 7.5 million. They are closer to 10.5 million, as 3 million people have stopped looking for work. Equally troublesome is the lower labor participation rate; some 5 million jobs have vanished from manufacturing, long America's greatest strength. Just think: Total payrolls today amount to 131 million, but this figure is lower than it was at the beginning of the year 2000, even though our population has grown by nearly 30 million.

These numbers are very troubling, but they are not the end of the bad news.

For an administration that promoted hope and change, it’s ironic that the President seems unable to change his failed approach to the economy. He needs to create an atmosphere in which the private sector has the confidence to begin expanding their business and hiring people to accomplish that goal. But business confidence only occurs when stability is present, not when threats of more taxes, more government spending, more deficits, more regulation, more health care burdens, and more ill-conceived and scientifically dubious environmental constraints are the daily narrative coming from the white house.

I suspect that part of the problem is that the President simply does not understand the private sector. He has never started a company, never met a payroll, never lead a private enterprise, and never managed a private sector project. In fact, he has never worked for any meaningful length of time in the private sector and has had very little actual experience in it.

Therefore, he leads from behind, offering no detailed plan for moving forward. He is, however, perfectly happy to criticize those that do provide such plans.

As a consequence, an ever increasing percentage of the American public have the feeling that we’re adrift—that our current leadership doesn’t have a clue. As they say, “hope” is not a plan.

At the conclusion of his lengthy article, Zuckerman writes:

Clearly, the Great American Job Machine is breaking down, and roadside assistance is not on the horizon. In the second half of this year (and thereafter?), we will be without the monetary and fiscal steroids. Nor does anyone know what will happen to long-term interest rates when the Federal Reserve ends its $600 billion quantitative easing support of the capital markets. Inventory levels are at their highest since September 2006; new order bookings are at the lowest levels since September 2009. Since home equity has long been the largest asset on the balance sheet of the average American family, all home¬owners are suffering from housing prices that have, on average, declined 33 percent (compare that to the Great Depression drop of 31 percent).

No wonder the general economic mood is one of alarm. The Conference Board measure of U.S. consumer confidence slumped to 60.8 percent in May, down from 66 percent in April and well below the average of 73 in past recessions, never mind the 100-plus numbers in good times. Never before has confidence been this low in the 23rd month of a recovery. Gluskin Sheff's Rosenberg captured it perfectly: We may well be in the midst of a "modern depression."

Indeed.