What do the 2016 Olympics and the September 2009 jobs report have in common? Jobs lost to overseas markets never to find replacement in the United States. Dan Burrows, writing for AOL’s Daily Finance on October 2nd, had this glimmering note of nattering negativity for the future: “Oh, and by the way, the average unemployment forecast for the middle of next year? It's the same as today: 9.8 percent.”
The markets reacted October 2nd, plunging at the job loss figures, 100,000 more folks than they figured (263,000 total lost) for that whopping 9.8% number (17% if you count those who want full time jobs but have either stopped looking or can only get part-time work). But “everybody knows” we’re heading north of 10%. What’s the problem? We all know that unemployment is a “trailing economic indicator” (a reflection of a recession that has passed). So what’s the problem?
The problem is that maybe, just maybe, those who define the beginning and end of a recession or depression simply based on market growth actually need to rethink this glib analysis, since it doesn’t mean a thing for most Americans. And maybe, just maybe, this period of unemployment is not a trailing economic indicator but is instead a longer-term symptom of an economy with no direction. Some call it a “double-dip” recession, but I think it is one giant economic reset of American hopes and dreams.
Just about every gain in employment has been linked to federal spending under the stimulus package or other incentives (like the cash for clunkers program). The private sector is, to put it mildly, moribund… unless you are a bankruptcy lawyer. More than a million Americans filed for bankruptcy in September, the highest since the laws were revised in 2005 and still one of the highest rates in U.S. history.
Americans are still figuring out what they can do to make a living. With new Social Security retirement claims 23% higher, it’s clear many of us have just given up. With almost one in five of us under or unemployed (and that excludes the above retirees!), the toll on our notion of self-worth is staggering. We all feel like Chicago as it lost its bid for the 2016 Olympics.
The harsh reality is that the economic missteps of a well over a decade of regulatory abuse and stupid government “laissez faire” policy-making has left the future of this great nation very much in question. While President Obama probably bit off a whole lot more than he could possibly chew in his opening months of the presidency, he has to feel a lot like a ship captain getting a new command: the Titanic just after it hit an iceberg. But even though he hardly caused this mess, he may just be stuck with responsibility for it in the eyes of the voting public.
With the average wage-earner in the U.S. working 32-33 hour weeks, there is also a lot of extra capacity that would have to be absorbed before new jobs are brought back or created. The solution may be hindered by the fact that most of what will eventually become a “recovery” (maybe in a few years) probably will not be born in our legacy companies. We need new inventions, new directions, new technologies, new employers and new jobs.
And the fuel for such nefarious opportunities has to be education – oh, despite lots of federal rhetoric to the contrary, we are actually cutting education budgets at virtual every private and state level – and reasonable access to credit for small businesses – ah, this beast is drugged dormant with little hope for any near-term relief. So as stock prices hover at what appear to be unsustainable highs (albeit lows compared with early 2008) – after all under and unemployed people struggling with mortgages in overleveraged homes does tend to spend the money on goods and services to support those stock prices. Back to the drawing boards Mr. Obama, and start with catching and rebuilding our educational system before it falls beyond repair and address the credit issue that is decimating the small business men and women of America.
I’m Peter Dekom, and I approve this message.