Obamanomics Charts of the Day
Via Geoff at Innocent Bystanders, whose post deserves a full read:
First there’s the update to the now-infamous Obama stimulus promise vs. reality graph:
Then there’s this, with benchmarking points added by yours truly:
The POR (Pelosi-Obama-Reid) Economy began roughly as spring turned into summer of 2008. I identified its onset in early July 2008.
Since we’ve been under their grip, we’ve endured four quarters of contraction, one quarter of largely artificially-induced growth, and an employment environment that is arguably the worst since the Great Depression.
Here’s Geoff’s sum-up:
The (first) graph says that within a couple of quarters, the stimulus package will stop the increase in unemployment and reverse the employment trend. That was the real mission of the stimulus. Stop job loss. Get the private sector hiring again.
So no matter how convoluted and fanciful the “jobs created or saved” numbers get, we just have to remember what the point used to be, and realize how far short we’ve fallen. And whose fault that really is.
As you point out, the critical moral hazard here is now how the financial industry responds to these bailouts, although that will be bad. Much worse is how average citizens respond to having their debts or, as the case may be, their savings wiped out. We’re about to create a mindset just the opposite of the one that emerged from the great depression.
Comment by Mynewscorner — November 7, 2009 @ 4:56 am
Ah, charts, I love charts…they convey so much the written word sometimes is unable to punctuate.
The WSJ is saying similar: http://online.wsj.com/article/SB10001424052748704795604574519602476681352.html?mod=djemEditorialPage
A familiar definition of insanity is to keep doing the same thing and expecting different results. So in the wake of yesterday’s report that the national jobless rate climbed to 10.2% in October, we suppose we can expect the political class to demand another “stimulus.” Maybe if Congress spends another $787 billion in the name of job creation, it can get the jobless rate up to 12% or 13%.
It’s hard to imagine a more complete repudiation of Keynesian stimulus than the evidence of the last year’s job market. We’ve now had two examples of such stimulus—President Bush’s $160 billion effort in February 2008 and President Obama’s mega-version a year later—and neither has made even the smallest dent in employment. As the nearby chart shows, Mr. Obama’s economic advisers sold the stimulus by saying it would keep the jobless rate below 8%. Actual results may differ, as they say.
But the punchline on employment here is this: The larger measure of joblessness that includes marginal and part-time workers jumped 0.5% to 17.5%. And the average hours worked in a week stayed the same at 33.0, which means that millions of Americans working part-time will have to become full-time before employers start hiring new workers.
We will know the economy is turning when current part time workers have their positions go permanent before there is any cessation of continuing total employment losses or increase in total employment. Contrary to the established rationalization of an economic turn around without a commensurate increase in employment, any upturn must increase the number the hours to accommodate that increase in economic activity. The reason for this is employers are only utilizing labor hours AS NEEDED because they are stringently managing the labor supply in response to their business activity. The idea of employment being a lagging indicator is nothing more than an excuse for the continuing failure of the economy to turn around, if they the Dems want to take the credit for the economy turning around, they MUST take the BLAME for the lag in the turn around.
Comment by dscott — November 7, 2009 @ 10:02 am
#2, “which means that millions of Americans working part-time will have to become full-time before employers start hiring new workers.”
This is a great point. You’re not going to take on someone new when you can get known additional value out of an existing worker.
Even in the low-overtime stage, it makes sense to strap on the OT to a limited extent to avoid the costs associated with training a new worker and their initial weak productivity, especially if you’re not confident that a recovery is sustainable — and almost no one has any confidence in this so-called recovery.
At the extreme, in a unionized and/or high-benefit situation, you’re willing to take on OT because in many cases (not as true any more because of ever-higher FICA break points) the marginal cost of an overtime hour is barely more and sometimes even less than the average cost of the first 40. You’ve already paid for the worker’s gold-plated health and dental care, unemployment insurance, etc. Because of the high fixed costs of just having an employee, those operations only hire when they absolutely must, and only after everyone is working 50-60-70 hours a week.
Comment by TBlumer — November 7, 2009 @ 10:57 am