By Bill Wilson
The U.S. unemployment rate dropped from 7.7 percent in February to 7.6 percent in March, according to statistics released last week by the U.S. Department of Labor (USDOL). That’s the lowest figure in more than four years — since December 2008. It’s also the seventh straight month this most widely watched of all economic indicators has stood below 8 percent.
Not only that the nation’s underemployment rate — billed as a broader and more accurate measure of joblessness — dropped from 14.3 to 13.8 percent in March.
Good news, right? Wrong. The latest unemployment data is actually the most visible, most disturbing of several recent indicators highlighting the fundamental weakness and instability of the current economy “recovery.” And while many legacy media outlets simply parroted the “positive” numbers mentioned above — more than a few did their jobs for a change and detailed the depressing data contained elsewhere in the report.
For starters the U.S. economy created only 88,000 jobs in March — the lowest total in nine months. That’s less than half what analysts were projecting (190,000), less than a third of the previous month’s total (268,000) and well below the 130,000 total needed to keep pace with population growth.
“This is a punch to the gut,” Obama’s former top economic advisor Austan Goolsbee said of the figure. “This is not a good number.”
Of course this sharp drop-off in hiring wasn’t the only bad news contained in the report. A whopping 663,000 Americans dropped out of the workforce in March — plunging the country’s labor participation rate to a 34-year-low of 63.3 percent. By comparison, the labor participation rate was 65.7 percent when U.S. President Barack Obama took office and 67.2 percent when former president George W. Bush took office.
Assuming normal labor participation rate increases, real unemployment last month didn’t decline by a tenth of a percent last month — it actually increased from 11.3 percent to 11.6 percent. All told, 206,000 fewer Americans were employed in March than in February — while 290,000 more Americans were unemployed.
Beyond that, it’s important to remember many of the “jobs” created in the preceding months were really nothing but new part-time positions taken by Americans who are forced to work multiple jobs to make ends meet. In fact the big employment gains posted in February included a record increase of 340,000 multiple jobholders.
Even more worrisome, March’s disappointing data represents the latest marker on a deeply depressing trajectory — highlighting the extent to which excessive government interventionism is crippling the private sector’s ability to rebound from economic downturns.
Despite an unprecedented barrage of deficit spending, money printing and unaccountable lending — we are witnessing a terribly lethargic “recovery.” In fact more than 62 months after the beginning of the “Great Recession” the economy has yet to recover the jobs it lost. By comparison, in the recession of the early 2000s job losses were recovered in 46 months while the early 1990s recession job losses were recovered in 31 months.
Compare these downturns to the recessions of 1953 and 1957 — which recovered their job losses in just 22 and 24 months, respectively.
Beyond these employment numbers there are other troubling data points to consider. First, for all the talk of a “housing recovery,” mortgage applications remain stagnant — calling into question the viability and sustainability of recent price increases. In fact Obama is so troubled by this development he is pushing the government to (once again) authorize loans to borrowers who cannot afford them — precisely the sort of brain-dead policy that landed us in this mess in the first place.
Speaking of being unable to afford things, growing numbers of Americans are discovering what that feels like. From the “end” of the recession in June 2009 through the end of 2012 Americans’ disposable income expanded by just 1.2 percent — an anemic figure which will be further pressured in 2013 by payroll tax hikes and other tax increases associated with “Obamacare” and the “Fiscal Cliff” deal. Not only that rising fuel, energy and health care costs are likely to continue consuming any modest disposable income increases — leading to declines in the discretionary spending that fuels our nation’s consumer economy.
Meanwhile the ongoing recession in Europe will continue to adversely affect American exports — placing additional pressures on the job market. Moreover lending will remain stagnant because banks are choosing government-guaranteed debt over investments in small businesses — a trend which will continue until interest rates are increased.
Add it all up and there’s one unmistakable conclusion to be drawn: Happy days are not here again. In fact there are increasingly ominous storm clouds on the horizon — and not much we can do to avoid them.
The author is president of Americans for Limited Government.
