Obama’s Claims that US Economy is ‘Good’ is Debunked
US President Barack Hussein Obama claimed recently, “The economy, by every metric, is better than when I came into office.”
Mr. Obama has been making some variation of this “the economy got better under my watch” claim since the Y 2012 presidential campaign.
The Big Q: Does his blustering does not align with reality?
The Big A: Not really, it is mostly false.
According to the data Mr. Obama’s claims of falling unemployment, consistent job growth, and rising per-capita DGP do not to offset a host of less-Rosy metrics indicating that the economy is actively deteriorating on many fronts, such as historically low labor force participation and high long-term unemployment rates.
Not surprisingly, 57% of respondents in a 2014 NBC News-Wall Street Journal poll falsely believed that the United States remained in recession.
Americans are very skeptical of the Obama Administration’s economy some of the Key reasons are listed below, as follows;
1. Historically Low Labor Force Participation: According to the Brookings Institution’s jobs gap calculator, the American jobs deficit bottomed at more than 10-M in early Y 2010 and has risen steadily ever since. That would be great news were it supported by other big-picture labor force measures, one of the most important measures of working America’s strength; labor force participation has been on the decline for years and shows no real signs of stabilizing. Labor force participation measures the proportion of employed or unemployed (actively seeking work) individuals against the total population of working-age, non-disabled people. According to the Federal Reserve Bank of St. Louis, the labor force participation rate declined from a long-term high of 67.3% in early Y 2000 to 62.4% in October 2015. This is lower than at any point since the late 1970’s. much of it is attributable to a sluggish recovery that penalizes older workers and those without college degrees, millions of whom were laid off by downsizing manufacturers before and during the Great Recession. Many people who cannot find jobs are choosing to stop looking for work, and thus stop participating in the American labor market rather than accept lower-paying jobs or hunt fruitlessly for increasingly scarce manufacturing jobs.
2. Persistent Underemployment: In early Y 2010, the US unemployment rate – measuring out-of-work labor force participants actively seeking employment – peaked just north of 10%. It has fallen slowly but steadily ever since, and now sits near 5%, a level the Center for Economic Policy Research finds nearly consistent with full employment. Many economists argue that traditional measures of unemployment understate labor force utilization. They point to a more expansive metric known as U-6. In addition to traditionally unemployed workers, U-6 measures the rate of workers employed part-time for economic reasons – workers who want and need, but can’t find, full-time work in a field relevant to their skills or education. It also measures marginally attached workers, defined as individuals who looked for work within the past 12 months, but have since given up the search. According to the Congressional Budget Office, the U-6 measure peaked above 16% at the height of the great recession. It remains above 12%, more than twice the current unemployment rate. While many U-6 workers do earn regular paychecks, they do not fully realize their earning potential. Workers who earn less spend and invest less, so that’s a major damper on US economic performance.
3. High Rates of Long-Term Unemployment: Despite marked improvement in the headline unemployment rate, long-term unemployment – the proportion of workers who have been out of jobs for 27 straight weeks or longer remains well above historical averages. According to the Congressional Budget Office, the long-term unemployment rate peaked above 4% in early 2010, when it accounted for about 40% of total unemployment. It’s now around 2%, or slightly less than 40% of total unemployment. But long-term unemployment remains above levels reached at any point between Y’s 1994 and 2007. The long-term unemployment problem is particularly acute in the manufacturing sector, where millions of workers laid off in the Great Recession struggle to find work at increasingly lean, high-tech U.S. manufacturing firms. It’s also a major issue for older workers, for whom age discrimination is the biggest threat. Since hiring managers tend to avoid candidates with long employment history gaps, these workers face a painful conundrum: They can’t get a job because they’ve been out of work too long. Over time, long-term unemployment contributes to depressed labor force participation rates as discouraged workers simply stop looking for jobs and retire early, return to school, or apply for disability assistance. And the loss of these labor force dropouts’ accumulated skills and experience – their human capital – causes incalculable economic harm.
4. Sluggish Wage Growth: The US government’s October 2015 jobs report was widely regarded as the year’s strongest because it indicated a modest but undeniable uptick in median hourly wages. But, one month does not make a trend. Prior to October, US wage growth had languished for years. As it debunked Mr. Obama’s economic success claims, inflation-adjusted median weekly earnings fell by about 1% from Y’s 2009 to 2015. During the same frame, inflation-adjusted median household earnings fell by about 4%. These figures are not consistent with economic good times.
5. Rising Poverty & Expanding Government Assistance Rolls: According to the Census Bureau, the US poverty rate rose by more than a full percentage point from the official end of the Great Recession, in Y 2009, to mid-2014. Although poverty stats often lag GDP growth figures, there’s no historical precedent for such a rise in the poverty rate so long after the end of a painful recession.Like decreases in median earnings, increases in poverty rates indicate underlying economic weakness. Since families living in poverty generally rely on government programs – Medicaid, WIC, SNAP (food stamps), and others – to remain healthy and solvent, elevated poverty rates strain federal, state, and local government budgets as well. According to a Y 2015 report from the U.S. Department of Agriculture, which oversees the federal food stamp program, food stamp utilization increased 39% between Y’s 2009 and 2014.
6. Weak Retail Sales Figures: Recent retail sales figures illustrate the American consumer’s newly cautious spending. According to Trading Economics, US retail sales have flatlined on a M-M basis since the Crude Oil price dive. Previous Crude Oil price drops, notably in the wake of the late-2000’s financial crisis, were accompanied by strong retail sales growth. This time is different, and it is not great news for the economy, 70% of which is driven by consumer spending.
7. Global Political Instability and Homeland Security Issues: As the 2016 Presidential campaign ramps up, global security issues are back at the forefront of the American political debate. War, terrorism, disease, and political turmoil do not just take human lives and tear apart families. In an increasingly interconnected world, they also threaten American business interests. The most troubling thing about global instability and insecurity is that perception often matters more than reality. By many measures, such as felony crime and violent death rates, the world is safer today than ever before. But global news coverage and social media bring every bit of bad news into our homes and offices, reinforcing our collective perception of an unstable world spinning rapidly out of control. Widespread fear that there is another another terrorist attack, another disease outbreak, another violent coup or civil war has a chilling effect on business investment, global logistics, travel patterns, and more. More than ever, the American economy is at the mercy of events that its participants cannot control.
The mild Recession that followed the dotCom bust lasted 6 months – April 2001 to October 2001.
The Great Recession, the United States’ most severe economic downturn since the 1930’s and precipitated the near-collapse of the global financial system, lasted about 1.5 years, December 2007 to June 2009.
More than 6 years have passed since the end of the Great Recession. That is longer than the interval between the dotCom bust recession and the start of the Great Recession. And the US economy still has not recovered its pre-financial crisis housing bubble momentum, even with the US Fed’s massive QE to fuel the economy.
By historical standards, the US actually overdue for a Recession. With economic instability mounting elsewhere in the world, the anemic recovery may not last much longer.
Many of us expect the United States suffer another economic downturn before it fully recovers from the last one.
So, No Mr. Obama the US Economy is not ‘Good’
Have a terrific weekend.