While President Obama’s been busy on his globe-spanning “OBL: I Got Him!” victory tour, the fragile US recovery seems to have been crashing into the rocks.
Wall Street economists spent yesterday taking a second and third look at their forecasts for tomorrow’s (now) much-dreaded April employment report — because job-tracker ADP said yesterday that companies hired a paltry 119,000 people last month. It was the smallest gain in seven months and way below the 177,000 that analysts were expecting.
Even worse, new orders for factory goods in March showed their biggest decline since 2008, smack in the middle of the worst downturn since the Great Depression.
Too bad Obama can’t plausibly take a victory lap for his stewardship of the economy other than to try and argue, “I kept us out of a depression.”
In the year since the heroic Seal Team 6 double-tapped that terrorist thug in Pakistan, the economy has grown just 2.1 percent. With growth so miserably slow, it’s no wonder worker take-home pay, adjusted for rising prices, has been flat over the last 12 months. (And over the last two years, for that matter.)
Sure, the unemployment rate has dipped to 8.2 percent today from 9 percent back then. But that’s only because Washington number-crunchers quit counting some 1 million unemployed Americans who’ve finally called off their job hunts. If the official size of the labor force was the same as in May 2011, the unemployment rate would be 8.8 percent.
Even if you believe the garbage-in-garbage-out economic models that say Obama’s trillion-dollar stimulus averted a 1930s repeat, it’s sadly apparent we’ve stumbled from the Great Recession into the Great Stagnation.
Consider: In the 11 quarters of the spending-led Obama Recovery, the economy has grown 7 percent total, creating 3.9 million jobs. Unfortunately, if we’re going to restore the job market to the state it was in back in 2007, before the financial crisis, it will require the creation of 14.8 million jobs in today’s terms, according to JPMorgan. A daunting task to say the least.
Oh, by the way, during the first 11 quarters of the tax-cut-led Reagan Recovery of the 1980s, the economy grew 18 percent, more than twice as much as during the Obama Recovery, creating a whopping 9.4 million jobs.
Just sayin’.
But it could be way worse, right? At least the economy isn’t imploding back into recession the way economies all across Europe are right now. But that might be America’s financial near-future if we follow Obama’s European-inspired austerity ideas.
Amazingly, high-tax Europe somehow thought it would be a smart idea to jack up taxes even further during a time of economic weakness. So, too, Obama wants to raise taxes — including the Buffett Rule, ObamaCare taxes and killing the high-end Bush tax cuts for entrepreneurs and investors — right as the US economy is barely treading water.
Indeed, lots of liberal economists want to take a flying leap off the “fiscal cliff” at year end by letting all the Bush tax cuts — including those affecting middle incomes — expire on Dec. 31.
But such fiscal recklessness surely would put the United States back into recession. As it is, whenever the economy grows as slowly as it is growing right now, there’s about a 50 percent chance it will backslide into recession during the subsequent 12 months.
We are in the recession red zone. If Obama ever gets done spiking the ball in the end zone, he might want to try preventing a Great Recession 2.0.
Working with Republicans to permanently extend all the Bush tax cuts would be a good first step. Immediately slashing the US corporate tax rate, currently the highest among advanced economies, would be another.
And if Obama isn’t going to do any of that, maybe he could at least make the US Treasury a few bucks by selling some merchandise on his next self-congratulatory victory tour. This actually could be a hot-selling item: “No job. No income. Obama got OBL . . . but all I got was this lousy T-shirt.”
James Pethokoukis is editor of The American Enterprise Institute’s Enterprise blog.