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Is a Jobless Recovery a Recovery?

Posted by Larry Doyle on November 16, 2009 2:20 PM |

Cartoon by Steve Breen, The San Diego Union-Tribune

Jobless recovery seems to be a phrase economists and analysts are using with increasing frequency. In my opinion, this usage is akin to a drug dealer or liar repeating his rationalizations to the point where he believes his own bulls%&t.

Are we to believe this economic subterfuge? I believe the American public buys into this rationalization at our peril. Why? Let’s navigate along the most important leg of our economic landscape.

Our unemployment rate currently stands at 10.2% while the underemployment rate is 17.5%. On the heels of the unemployment report released on November 6th (see my summary here), many analysts and economists revised their projections for unemployment to 11% and some as high as 14%.

Just today, Fed Chair Ben Bernanke in a speech at the Economic Club of New York highlighted the fact that the current excess supply of labor in our economy is even worse than indicated. Ponder that for a second. The lead banker in our nation is telling us that our unemployment situation is even worse than statistics would indicate. What does that mean?

Excess supply of any commodity – be it labor, goods, services, or products – will drive the price of that commodity down. As such, as the price of labor declines, incomes will decline as well. In the process of declining income, personal consumption and accompanying retail sales will not grow.

With sluggish, if not negative, personal consumption and retail sales, companies will reluctantly rebuild inventories, add overtime to existing laborers, or add temporary workers without benefits prior to adding the fixed costs of hiring new employees.

What burden does that place on federal and municipal governments? The added burden of providing increased programs and services to help these individuals and the economy at large. Municipalities will be forced to increase taxes given their obligation to balance their budgets. Increased taxes will also serve as a drain on incomes . . . and the vicious cycle will perpetuate.

Jobless recovery? I don’t think so. Perhaps analysts and economists should try jobless bounce. The economy and markets may be bouncing from the precipitous freefall of last year, but without job growth the economy is not recovering. Ultimately, the economy is about putting people to work.

Why do economists, analysts, and government officials work so hard to sell the phrase ‘jobless recovery?’ To rationalize the billions, if not trillions, in dollars being implemented across the financial industry and the economy at large.

Wall Street fooled the American populace once by buying into the concept of managing risk through securitizations. Will the American populace allow Washington to fool them by selling the concept of a jobless recovery?

As Danielle Park, my fabulous guest from last evening’s broadcast of No Quarter Radio’s Sense on Cents with Larry Doyle, informed us: ‘time reveals truth.’ At this time and for the foreseeable future, the truth of our current economy is that without job growth there is no real economic recovery.

LD

  • AMEN Larry! Could not agree more sir. In support of your opinion, Bloomberg just reported that in June, an all-time record high 35.1 million Americans received food stamps! Over 35 million Americans on food stamps, and that was as of four months ago!! We’ve lost another million jobs or so since then, so that number has to be higher, perhaps much higher, right now today. This was the seventh straight month of record high participation, and was a 22% increase from just a year earlier. As the article says, it’s not only due to lack of jobs, but it’s also (as you said above) due to the fact that even people who HAVE jobs are earning less.

    http://www.zerohedge.com/article/record-351-million-foodstamp-recipients-believe-every-word-bernankes-propaganda

    Matt

  • Bill

    To amplify on Danielle’s comment that “time reveals truth” that has also been expressed as truth being the daughter of time.

    That time frame will be particularly attentuated given the obfuscation, through ignorance, perfidy and venality, by what passes as the media in this country.

  • C

    The reason why we have no jobs now is because they have all been shipped overseas. If my memory serves me correct it was Bush who began this process long ago with a promise to replace the droves of jobs leaving this country but unfortunately the replacements never came. This is when unemployment started to rise and it started a viscious cycle. This is not by far the first time unemployment has been in the news over the last few years it actually has been a constant in the news. The less people you have employed the less people you have to make purchases to keep the economy stimulated. I think to some people that when these warehouses, plants, and manufacturing jobs were being lost it somehow didn’t register that it would affect them also. Therefore it has caused the economy to continously shrink until we end up where we are now.

  • C

    So the question should be how do we replace these jobs that have been lost or how do we get them back. Wealth in this country is in the wealth of the people. Not just a few Americans here and there but that the majority of the people are able to live comfortably and that does mean jobs. There has been a great shift between the wealthy and the poor, a fizzling out of the gray area in the middle. This gray area is what keeps this economy strong. We have seen proof of this by allowing big corporate companies to profit by stripping america of its workforce. I think somebody once said these jobs didn’t make a difference to our society. Well looks like it does matter it has essentially bankrupted our economy and left it in shambles.

    • whoisjohngalt

      It was not Bush who shipped the jobs overseas. Clinton signed NAFTA after Al Gore debated Ross Perot. Perot and Pat Buchanan were the only national figures that were against NAFTA. BLAME BUSH FOR EVERYTHING–IT IS GETTING OLD.

  • Mike

    I think we’re going to have to accept the fact that the living standard in this country is going to have to go down. We’re so obsessed with the idea of bringing things back to the way they were, but its impossible now. This isn’t some BS cyclical recession this is 40+ years in the making.

    I hope I’ll be able to send my future kids to college, if a degree hasn’t lost ALL its credibility by that point.

    We need to invent better stuff and become an export heavy nation…

  • coe

    LD – There’s a line in the movie “Dave” when Kevin Kline, the look-alike Presidential stand-in, but in real life just a guy who runs an employment agency, says, “…if you’ve ever seen the look on somebody’s face the day they finally get a job…they look like they could fly…and it’s not about the paycheck, it’s about respect. It’s about looking in the mirror and knowing that you’ve done something valuable with your day.” In my opinion the political and business leaders in this country continue to posture emptily, and continue to pursue their own self-aggrandizing agendas, but they don’t get it on a moral or economic basis. Pick any CEO whose Board allows him to pay himself double digit millions of dollars. Couldn’t he get by with a million less, two million less? Couldn’t those dollars and those in hundreds and thousands of cases like that be redeployed to prevent massive lay-offs or go toward re-hiring some very capable but displaced workers? Wouldn’t his company benefit from that “sacrifice”, wouldn’t the ethos of the country, wouldn’t the Federal budget?

    I thought I read an item where the City of Pittsburgh was contemplating adding a surtax on college tuitions for the seven institutions in town to help combat the municipal budget challenge. Sure… pile on another $400 on an after-tax $40,000 annual cost for these fine Universities. Talk about disincentives and heading in the wrong direction.

    You are spot on, LD, at the core of the economic engine we find labor and housing. We can and do use all the statistics at our disposal to dispel truth as well as spin. In my mind a great part of the lubricant of that economic engine is confidence and trust. Call me crazy, but it seems to me that both are running dry.

    And along comes our President with a tax hike proposal that could and will choke a horse, with a costly health care plan that isn’t favored by the populace, with a renewed emphasis on the socialistic position of the government in our lives and all attendant consequences (including your aforementioned hike in municipal taxes), it’s just too much to fathom. Toss in the misguided, self-promoting titans of industry (and I am not isolating these thoughts to the vilified bankers and Wall Street leaders), and their total disdain for the value of a human being, and who can possibly be surprised we have danced our way into this mess.

    Jobless recovery! Tell that to the tens of millions of people who are caught directly and indirectly in the throes of unemployment. Shame on us for allowing this to happen. We know better. We are better. We need to lead better and act better! Sorry for this early morning rant – you lit my fuse!

  • Lori

    My husband was laid off three weeks ago after 37 years how many ways is there to say HELL NO it is not a recovery or a recovery for who Wall Street?

    • Larry Doyle

      Lori,

      I empathize with you and your husband. I appreciate your sharing this sentiment along with your other comments with all the readers here at Sense on Cents.






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