June Jobs Report Brings Another Round Of Disappointment

With four months to go until Election Day, the Obama Campaign was greeted with a very dismal jobs report this morning.

Despite some signs I noted yesterday that suggested that the June jobs report might not be as disappointing as some feared, the slowing trend that we saw starting to develop in March, which continued into April, and got even worse in May, were still there in June. Analysts had expected that we’d see at least 90,000 jobs added in June, with some this morning even suggesting a number as high as 125,000 in light of yesterday’s ADP report. In the end, though, we ended up with an unchanged unemployment rate and a meager 80,000 net jobs created:

The number of unemployed persons (12.7 million) was essentially unchanged  in June, and the unemployment rate held at 8.2 percent. (See table A-1.)

Among the major worker groups, the unemployment rate for blacks (14.4 percent)  edged up over the month, while the rates for adult men (7.8 percent),
adult women (7.4 percent), teenagers (23.7 percent), whites (7.4 percent), and Hispanics (11.0 percent) showed little or no change. The jobless rate
for Asians was 6.3 percent in June (not seasonally adjusted), little changed from a year earlier. (See tables A-1, A-2, and A-3.)

In June, the number of long-term unemployed (those jobless for 27 weeks and over) was essentially unchanged at 5.4 million. These individuals accounted for 41.9 percent of the unemployed. (See table A-12.)

Both the civilian labor force participation rate and the employment-population ratio were unchanged in June at 63.8 and 58.6 percent, respectively. (See table A-1.)

If that labor force participation rate were at the same level it was when Barack Obama took office in January 2009, the unemployment rate would be 10.9%, a number which in and of itself makes clear just how many people are sitting on the sidelines right now, and likely will continue to do so until there are signs that there is real job growth in this economy. Elsewhere in the report we find that U-6, the broadest measure of unemployment which had dropped quite nicely in the early part of the year, ticked up against for the second straight month and now stands at 14.9%.  The number of unemployed people stands at roughly 12.7 million, with more than 41% of those being unemployed for more than six months.

There were revisions to the previous two months of jobs report. The April report, which had put the net jobs number at 77,000 was revised downward to 68,000, while May’s number of 69,000 was revised upward to 77,000. That May revision makes the June report look even weaker since it shows that jobs growth barely tread water. Indeed, for the entire Second Quarter of 2012, there were only 225,000 jobs created, an average of just 75,000 per month. That’s the kind of number we actually ought to be seeing on a monthly basis. Indeed, we ought to be adding between 125,000 and 150,000 just to keep up with population growth. During the First Quarter, we added an average of 226,000 jobs per month and it seemed like the job market was picking up, but something started going off the rails in March, and it continued into the Second Quarter. So, it’s not surprising that CNBC reports that the Second Quarter was the weakest quarter for growth into two years:

With yet another month of weak employment growth, the second quarter marks the weakest three-month period in two years.

May’s weak initial 69,000 report was revised upward to 77,000, which made the June number essentially flat.

There were a few bright spots: The overall work week edged higher by 0.1 hour to 34.5 hours and average hourly earnings grew 6 cents to $23.50.

But it was an otherwise dismal report that will up the stakes in the race between President Obama and Republican challenger Mitt Romney.

There are now only four jobs reports left before the Presidential election, including one that comes out the Friday before the election itself. Quite obviously, each one of them is going to be crucial for both candidates:

WASHINGTON — Economists are slashing their already tepid growth forecasts. The unemployment rate seems stuck at around 8 percent. It is a tense time for the American economy. It is also the time that some experts believe the country’s undecided voters are beginning to cement their presidential picks.

That is why many political scientists and consultants consider Friday’s jobs report and the ones immediately following it to be so important — perhaps more so than those of the previous three years.

“I don’t know whether it is because American voters are myopic, or because they are forward-looking,” said Andrew Gelman, the director of the Applied Statistics Center at Columbia University. “But they appear to care most about change in the economy in the year preceding the election,” rather than the state of the economy over an incumbent president’s first four years.

Some narrow the critical period even more, arguing that what happens from April until October of an election year weighs especially heavily on voters’ minds.

“It’s difficult to sort out the electoral effects of specific slivers of economic conditions,” said Larry M. Bartels, a Vanderbilt University professor of political science. But he cited the economic climate of the middle of the election year as unusually important — a time when even wavering voters begin to lock in decisions on the presidential race and lock out conflicting reports about the economy.

This political reality is not lost on the Obama and Romney campaigns, which have sparred over the state of the economy to the near exclusion of every other issue.

Mitt Romney, the presumptive Republican nominee, has centered his campaign on the notion that President Obama’s incompetence as an economic steward has made recovery weaker than it need have been — with unemployment too high and job growth too slow.

Mr. Obama has countered that Mr. Romney’s business record at Bain Capital epitomizes the profits-at any-cost philosophy that has cut middle-class jobs. As for his own record, he argues that pushing the 2009 stimulus program through Congress has helped the economy rebound and that without it, the nation would be in worse economic straits.

“Throughout history, it has typically taken countries up to 10 years to recover from financial crises of this magnitude,” Mr. Obama said recently, noting the sustained recessions in Europe. He added, “Our economy started growing again six months after I took office, and it has continued to grow for the last three years.”

The question now is which economic messages will sink in among the pool of voters — roughly one in 10 — who tell pollsters they are undecided.

There are some signs, of course, of renewed economic optimism, as I noted yesterday. It’s possible, though, that this optimism could be related to factors such as the declining price of gas, as was suggested by a few in the comment thread yesterday, rather than overall confidence in the economy. Indeed, recent retail sales figures would seem to indicate that consumers are keeping their wallets shut tight at the moment, a sign that they are not confident to actually spend money on things. This jobs report, along with the ones that will come out between now and Election Day, along with other economic statistics will play a large role in how those undecided voters view the economy, but so will their personal experiences:

The arguments likeliest to prove decisive will come not from candidates directly, but from peers and acquaintances of those undecided voters — whom campaign strategists consider the most persuasive messengers. “Both campaigns will have extraordinarily sophisticated outreach and targeting operations,” Mr. Schmidt said. “If you’re an undecided teacher, you’ll get phone calls from other teachers,” as well as messages from Facebook friends and Twitter followers.

Analysts say voters give more heed to where the economy is headed than to its current state. That means a president overseeing a high but falling unemployment rate might have a better shot than a president overseeing a lower but increasing one.

To make the point, Mr. Gelman used the presidencies of Jimmy Carter, who did not win re-election, and Ronald Reagan, who did. “Under Carter, the economy did well and then got worse,” he said. “Under Reagan, it got worse and then got better. If you average over four years, the economy was better under Carter than Reagan. But that is not how voters think.”

The difference, of course, is that when Jimmy Carter headed to the polls in 1980 the economy was not only bad but it looked it was getting worse. In 1984 when President Reagan was seeking re-election, the unemployment rate was still in the 7% range but, the economy was adding jobs at a tremendous rate. In the 1st quarter of 1984, the economy added 1,177,000 jobs in the first quarter, and then another 1,217,000 jobs in the second quarter, and another 321,000 in the third quarter. That’s an average of 301,667 jobs created in the first nine months of the year. By the end of that year, the economy had created 3,360,000 jobs. We’re not going to get anywhere close to that in 2012. (Source for 1984 figures [PDF])

It’s hard to say what voters will think about the economy between now and November, but reports like this aren’t likely to stimulate much optimism no matter how the Obama Campaign tries to spin it.

FILED UNDER: Barack Obama, Campaign 2012, Economics and Business, Politicians, US Politics,
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Modulo Myself says:

    You have to wonder if the optimism is simply another word for diminished expectations. I mean, is there anybody who thinks that the economy will somehow resemble Clinton’s? Or even the early years of the Bush era?

  2. john personna says:

    I the tension is always between the unemployment, the labor participation rate, and what the observer wants to do about it.

    If you are a “take our lumps” kind of guy (like you, Doug?) then the number is what it is.

    It’s not like you can fault the administration or congress for giving you the lumps you feel you deserve.

  3. Ben Wolf says:

    @Doug Mataconis

    I’m glad you were thorough and used broader measures such as U-6, lest people forget that unemployment and under employment are much greater than the “official” figure we routinely see.

    There are some signs, of course, of renewed economic optimism, as I noted yesterday.

    I just don’t see that this can help. There are structural, rather than cyclical, problems underlying our economic troubles and the consumer does not have the capacity to come to the rescue no matter how confident they may feel. Businesses confronted with the uncertainty of poor market signalling and lack of demand for their products have no incentive to expand investment or to hire and I don’t see this changing under current policies.

  4. al-Ameda says:

    “Throughout history, it has typically taken countries up to 10 years to recover from financial crises of this magnitude,” Mr. Obama said recently, noting the sustained recessions in Europe. He added, “Our economy started growing again six months after I took office, and it has continued to grow for the last three years.”

    It is always good to remember that Romney made his money be reducing employment.

  5. Drew says:

    Look at the bright side, no matter the underperformance the unemployment rate stays at 8.2%. (snicker)

  6. john personna says:

    @Drew:

    Snicker? That sure falls in line with the 2 point conservative plan:

    1) Do nothing on the economy
    2) Blame Obama

    … or did you have a concrete program in mind? … or did you want to blame the uncertainty fairy again?

  7. C. Clavin says:

    “…Indeed, for the entire Second Quarter of 2012, there were only 225,000 jobs created, an average of just 75,000 per month. That’s the kind of number we actually ought to be seeing on a monthly basis…”

    Based on what, exactly?
    Reagan numbers? Clinton numbers? Bush43 never produced those kind of numbers on a consistent basis…he averaged 7,000 Private Sector jobs a month for eight years…1/10th of this months job growth.
    Every administration, from Reagan on up to this one, has had massive Public Sector job growth to count on. You can’t lower the UE rate much and shrink Government at the same time. We’ve lost 100,000 teachers jobs this year alone.
    This is the same story we’ve been seeing for three years. Republicans chose to do nothing to help the country because they gain politically if the country suffers. Intellectually challenged pundits are apparently incapable of recognizing this, and lament Obama’s poor job creation performance. Will the Republicans ploy work? If the intellectually challenged pundits are any indication………….

  8. bandit says:

    Too bad the excuse machine doesn’t produce jobs.

  9. john personna says:

    @C. Clavin:

    225,000 might be as good a number as any for recovery. It’s commonly claimed that 125,000 jobs a month are needed to keep up with population growth. So you gotta beat that by some margin to catch up.

  10. john personna says:

    @bandit:

    What does?

    Seriously, we are up against an important contradiction. The libertarian right doesn’t think the President can or should shape the economy. At the same time the more cynical of them like to blame him.

    Let’s say you aren’t of that stripe. What plan should congress have enacted, and forced the President to sign or veto, to improve this picture?

    A year or two ago conservatives were still saying “one more tax cut, that’s all we need.” Even they seem to have tired of that hope, dream, cargo-cult nonsense.

  11. Brutalfacts says:

    Isn’t that 80,000 more jobs than the net job gain of the entire Bush era? 4.7 million more jobs during the Obama term than the net of the entire Bush adminstration? 24 consecutive month of job growth?

    Withoiut context is there a more meaningless report?

  12. Ben Wolf says:

    @john personna:

    What plan should congress have enacted, and forced the President to sign or veto, to improve this picture?

    I wouldn’t count on getting an answer more sophisticated than “cutz arrr guud” from bandit.

  13. john personna says:

    @Ben Wolf:

    It’s not just Bandit. The House Republicans have voted on a lot of things. They’re even going to vote on repeal of ObamaCare next month. Did they ever pass out of the House a “jobs bill?”

    It’s not like repeal of the mandate is going to help on jobs. Mass has had a mandate for years and currently enjoys 6 percent unemployment. We should all be so lucky …

  14. Nikki says:

    It’s hard to say what voters will think about the economy between now and November, but reports like this aren’t likely to stimulate much optimism no matter how the Obama Campaign tries to spin it.

    And yet, the public still recognizes that the dreadful state of the economy is still due to Bush 43 and also knows that our incredibly dysfunctional Congress has become a part of the problem by not providing a solution.

  15. Nikki says:

    Did they ever pass out of the House a *reality-based” “jobs bill?”

    FTFY

  16. PGlenn says:

    Where did I hear all this before?

    . . . “The Republicans/Democrats chose to do nothing to help the country/war because they gain politically if the country suffers. Intellectually challenged pundits are apparently incapable of recognizing this, and lament Obama’s/Bush’s poor . . . performance. Will the Republicans/Democrats ploy work?”

    . . . “That sure falls in line with the 2 point conservative/progressive plan: 1) Do nothing and/or obstruct; 2) Blame Obama/Bush

  17. PGlenn says:

    And, right on cue, Nikki blames Boooosh!

    Progressives/Democracts blaming Bush = sophisticated economic analysis from the reality-based community.

    Conservatives/Republicans blaming Obama = nonsensical rantings from anti-science lunatics.

  18. john personna says:

    @PGlenn:

    Huh? Did the Democrats lose a war when I wasn’t looking?

    Are you saying Iraq just needed more commitment or something?

  19. john personna says:

    @PGlenn:

    Well, if you don’t want to wear the “nonsensical rantings from anti-science lunatics” you gotta hold it together a bit better … or at least explain more patiently.

  20. Ron Beasley says:

    With the World financial system on life support, Europe falling apart and China moving towards recession it’s surprising there is any job growth at all.

  21. rodney dill says:
  22. Rob in CT says:

    The great muddling through continues. Public sector layoffs are making recovery slower/harder. If you really, really believe that those public sector job losses will end up paying dividends in the future (reduced deficits, at somepoint, maybe), I guess you can rationalize it. In the short-term, however, those layoffs are hurting.

    The way I look at it is this: the crash of ’08 was really, really bad. Since then, policy has been so-so at best, with the best of it early on. But the crash of ’08, to me, was more of a revelation of a dismal reality – a tearing of the veil – than it was a business cycle thing. Basically a lot of the gains made prior to ’08 were illusory. And if you look at it that way, you begin to see that the recovery from the dot-com boom/bubble was pretty crappy (as much of it was simply debt-financed gambling on real estate). And if you look at the chart of private sector debt levels, all you see from the 1950s on is a seemingly inexorable climb (to heights that are, to me, frightening. Moreso than public sector debt), that IIRC accelerated in the 80s. Thinking about globalization and increased automation of industry, I wonder how in the hell indebted Americans are ever supposed to deleverage. They need gainful employment – emphasis on gainful.

    Look at WWII – the greatest government spending program in our history, with nothing else coming close. Pretty much everybody agrees that it finished off the Depression, though there are varying takes on why. Mine is this: everybody had a job, and at the same time consumer spending was constrained so that we could focus on pumping out tanks, airplanes, ships, etc. Not exactly productive work, btw, in the way we usually think of it. The result was massive deleveraging – private debt levels fell like a rock. We basically took a massive amount of private debt and stuck it on Uncle Sam’s tab. The war ended and people had a bunch of pent up consumer demand, and they had solid balance sheets again. There were other factors, no doubt, but those seem crucial to me (especially in a less “globalized” world).

    Can that be replicated, without the fuss of mass destruction and death? If not, why not? My answers are: a) politically impossible, duh; and b) trade imbalance would syphon too much away?

    Just thinking out loud here.

  23. Racehorse says:

    One thing we have in our state is a “tax free” weekend a few weeks before school starts. This applies to many things besides crayons, glue, and book bags. It really helps all aspects of the retail economy and boosts spending. Even restaurants and convenience stores benefit from increased business. Now if this model was applied as a nationwide tax-free weekend, with no taxes on anything from Friday to Sunday, think of the jump the economy would get! Salesmen would get higher commissions, workers more hours, more workers hired, and manufacturers more orders! This is a win-win situation for everyone! Simple ideas like that could get the economy really going again – you have to get some motivation for people to get out and buy!

  24. john personna says:

    @Rob in CT:

    I largely agree.

    Can that be replicated, without the fuss of mass destruction and death? If not, why not? My answers are: a) politically impossible, duh; and b) trade imbalance would syphon too much away?

    I’m afraid globalization is more than simple trade imbalance.

    I kind of worry that the old US model needed a third world to go with it.

  25. john personna says:

    @Racehorse:

    Economists would expect people to learn, and to simply shift their usual purchases to those days.

    That, and continue to use the internet to avoid local sales tax.

  26. PGlenn says:

    john personna: it’s pretty simple really. You accused conservatives/Republicans of having a two-point program, one point of which is “Blame Obama.” Yet “Blame Bush” continues to be one of the main excuses used by the Obama administration/Democrats/progressives when they are questioned about the poor performance of the economy since Jan. 2009. Do you need me to explain this basic point even more patiently?

  27. C. Clavin says:

    @ John Personna…
    I understand you have to make 125K jobs, or so, just to stay even.
    It’s just that you cannot do that while you re at the same time shrinking Government.
    http://www.epi.org/publication/public-sector-job-losses-unprecedented-drag/

  28. C. Clavin says:

    @ PGlenn…
    Bush left the greatest economic catastrophe since the Depression.
    This is the slowest recovery since the Depression.
    Do you need me to explain this basic point even more patiently?

  29. john personna says:

    @PGlenn:

    I don’t blame Bush for the crash. I think he should have been more conservative leading up to it … but I’m not alone in thinking that, am I? Many conservatives think Bush should have been more conservative.

    Now, given that I don’t blame Bush, nor do I think a “2001-2009” jobs count is meaningful in itself …

    Can we get back on topic?

    What is the conservative plan for jobs growth, right now, in the summer of 2012?

  30. john personna says:

    @C. Clavin:

    It might confirm my “independent” claim, but I think we should “refactor” government spending, adding some more in places and taking some away.

    At negative real interest rates for treasury bonds, we don’t have to fear borrowing … but that doesn’t mean I support nonsense like high speed rail (outsourced explanation).

  31. PGlenn says:

    C. Clavin: let me see if I can grasp your logic here:

    Bush left the greatest economic catastrophe since the Depression. This is the slowest recovery since the Depression.

    Bush was the president when the 2008 financial crisis hit; therefore, he “left the catastrophe,” i.e. his administration’s policies were primarily responsible for the recession.

    Obama has been the president since Jan. 2009, during the “slowest recovery since the Depression”; therefore, he’s leaving his own catastrophe, i.e., the Obama administration’s policies have been primarily responsible for the anemic “recovery”?

    Okay, whatever you say. Sounds a bit reductionist to me, but if it works for you . . .

  32. john personna says:

    @PGlenn:

    I don’t think that’s really honest. If you want to play the “term game” then Obama does get a recovery. If you don’t want to play the term game, you shouldn’t.

    It’s also dishonest to say “administration policies” when administration policies were never, ever, passed without modification into law.

    Every single economic legislation had horse-trading and buy-in with conservatives.

  33. Racehorse says:

    @john personna: If this were applied to all purchases, just think of the increase in car purchases for example. You would see some unplanned purchasing just for the tax savings. I don’t care if it is a $5 million yacht, that money gets back into the economy as the salesman spends some of their huge commission and the yacht builders could see more orders. The person who bought the new yacht sees it and they have to have a new one too! This would apply to many things, from stylish book bags to new shoes!

  34. Racehorse says:

    @john personna: If this were applied to all purchases, just think of the increase in car purchases for example. You would see some unplanned purchasing just for the tax savings. I don’t care if it is a $5 million yacht, that money gets back into the economy as the salesman spends some of their huge commission and the yacht builders could see more orders. The person who bought the new yacht has friends who see it and they have to have a new one too! This would apply to many things, from stylish book bags to new shoes!

  35. john personna says:

    @Racehorse:

    OK, so people shift their purchases, buy more cars and yachts, and at the same time state sales tax revenues fall.

    Who pays the bills? Or do you want schools to cut back in response?

    This is, in microcosm, the problem of cutting taxes for growth again and again. At the end of it you have no way to cover the budget, and you’ve got to think of a new trick.

    Given that states and the federal government can’t cover spending, it’s time for a new trick.

  36. Ron Beasley says:

    If you have to blame one person for all of this it’s Alan Greenspan aka bubble man. But the reality is a world economy based on cheap energy and credit was not sustainable. We probably reached the end of that economy in the 90s but Greenspan made it look it was still going by flooding the economy with cheap credit.
    Another couple of names that come to mind would be Phil Graham and Bill Clinton who did away with Glass-Steagall and turned the banking infrastructure into a casino.

  37. john personna says:

    @Ron Beasley:

    Greenspan is a likely suspect. At higher rates of interest is is possible that “the giant pool of money” would not have fled to badly managed mortgage backed securities. There was cheap credit, but it was also driven by cheap money.

  38. PGlenn says:

    john personna, my bad – I was a bit hasty in suggesting that, like some progressives/Democratc, you’d “blamed Bush” in oversimplified ways, etc. Before “getting back on topic,” then, I’d only need to resolve two other possible hangups:

    1). People like me (conservative-libertarians, for lack of a better term) do not claim that presidents have no, or ought not to have any, major influence on the economy. Naturally, an administration’s policies can have important, at times serious effects, on economic variables. We do not believe, however, that governments can “fix” the economy in the sense that expert policymakers can approximate the perfect mixture of policy and regulatory instruments that will maximize economic growth and prosperity. Usually, the more ambitious attempts to fix (read: micromanage) the economy will cause more harm than good because the modern world is hyper-complex. Obviously, government is absolutely essential to the promotion of economic prosperity, but too often government attempts to do things it’s not very good at – heck, none of us are good at some of the things we expect government to perform.

    2). Most of us do not “blame Obama” for the persistence of the recession, per se, but we believe that Obama administration policies have been ineffective for a variety of reasons. We do “blame Obama” for ObamaCare, EPA overreaching, bad energy policies, etc., but we believe that the world is way to complicated to blame Obama along lines similar to the two-dimensional “blame Bush” attacks we heard for, what, six+ years?

    Now back to your question . . . My opening (very brief) answer is: the short-term “solution” (which won’t fix the economy) is replace Obama with Romney; the long-term “solution” (which won’t fix the economy) is to appreciate that markets are the least imperfect mechanism (I believe that “perfect market theory” has actually been an albatross for conservative-libertarians). I’d be happy to discuss these points in much greater detail.

  39. slimslowslider says:

    @PGlenn:

    Good lord.

  40. john personna says:

    @PGlenn:

    Now back to your question . . . My opening (very brief) answer is: the short-term “solution” (which won’t fix the economy) is replace Obama with Romney; the long-term “solution” (which won’t fix the economy) is to appreciate that markets are the least imperfect mechanism (I believe that “perfect market theory” has actually been an albatross for conservative-libertarians). I’d be happy to discuss these points in much greater detail.

    OK, that’s honest.

    I do think though it underestimates the trust in the market we now have, and how little Obama has actually moved the bar. I mean, ObamaCare reduces to people buying their choice of insurance from private companies. Of course Romney loved that. It is the market alternative to a single payer system.

    We live in topsy-turvey world. People react to RomneyCare as if it was socialism.

  41. john personna says:

    Actually PGlenn might highlight the real problem for the Romney campaign.

    He’s saying he wants Romney to do practically the same things Obama is doing. The differences are left to be filled out later.

  42. Moderate Mom says:

    @Brutalfacts:

    During most of Bush’s two terms, the country was at what is considered full employment. It’s a lot harder create jobs when there aren’t many people looking for work or employers looking for employees. Now we have over fourteen million people either looking for a better job, or for any job at all.

    You are the one comparing apples to oranges. Different economy, different expectations.l

  43. smintheus says:

    And here I thought the libertarian view was that markets should be left to self-regulate, and the government is incapable of improving on the invisible hand. But now it turns out that the government is to blame when private employers don’t hire as many people as some might like. Call me confused; aren’t libertarians as always having it both ways?

  44. john personna says:

    @Moderate Mom:

    Bush’s term included a lot of economic history:

    – Dot Com bubble
    – Dot Com crash
    – Housing bubble
    – Housing crash

    averaging across them is as silly as taking them end-to-end.

  45. Moderate Mom says:

    @john personna:

    Either that or a huge swath of the developed world reduced to rubble.

  46. Gustopher says:

    I blame the following:

    – Clinton for the repeal of Glass-Steagal, which caused the collapse to spread out of the speculative financial sector,

    – Reagan, Clinton and Bush for cutti tax rates on the upper class, which makes it easier to extract wealth from businesses, rather than the business reinvesting that wealth

    – Greenspan for propping up bubbles

    – Bernake for focusing on half of his job (keep inflation low), and ignoring the other half (unemployment). We need modest inflation, so sitting on a pile of cash costs something, to prod the job creators to actually create jobs by investing in new businesses.

    – Republican congress for pushing cuts in spending during a massive recession.

    – Germany, just because.

  47. PGlenn says:

    john personna: thanks for the refreshingly engaging responses (what we usually get is slimslowslider at 12:17) Okay:

    I do think though it underestimates the trust in the market we now have, and how little Obama has actually moved the bar.

    Yes, but the market progressives (a la Matthew Yglesias?) tend to see market failures around every corner, which must be (micro)corrected by Ivy-grad technocrats. Twenty years ago (although I was very young then), people like me were ecstatic that intelligent, influential market progressives were coming out of the closet, but we eventually realized that the all tax credit programs, government incentives, etc. were only really succeeding at making certain investors rich and certain technocrats more important. There is a difference between “soft socialism” (Western Euro) and “market progressivism” (I still much prefer the latter), but both place unrealistically high demands on policy designers.

    I mean, ObamaCare reduces to people buying their choice of insurance from private companies. Of course Romney loved that. It is the market alternative to a single payer system. We live in topsy-turvey world. People react to RomneyCare as if it was socialism.

    I’m an anti-corporatist, which as you know, does not mean anti-corporations. I can live with Romney, but I’m by no means crazy about the guy. Anyway, Romney reminds me of some of those slick sharks who was eating up all the tax credits attached to “progressive” public-private partnerships over the last few decades. Now, these investor-types, and their progressive enablers, all meant well – yes, they wanted to make money, but they believed their projects would help make a better world. The implication that Romney and guys like him are – as a class – mostly greedy, callous corporate raiders is silly, but they did conveniently buy into promises that could never deliver.

    When we grumble about Romney, we’re asking, in a nutshell, “Didn’t he learn anything over the last 20-odd years?” Still, we can’t really pick only on Romney for (partly) falling prey to such schemes as RomneyCare. As you imply, it was somewhat consistent with the leading edge of a particular (moderate, corporatist) branch of “market conservativism” only 5-10 years ago. But that corporatist conservativism has been ebbing, and not because conservatives/libertarians have “gone way right,” either; it’s because it doesn’t work.

  48. PGlenn says:

    john personna, I did not mean to suggest that I want, or expect, Romney “to do practically the same things Obama is doing.” At the very least, I expect Romney to push for changes in energy policy/regulations and economic regulations in general.

  49. john personna says:

    @PGlenn:

    Thank you for the complement. I decided to try more patience today.

    I was cutting to the chase a bit on what Romney really represents … and I guess I can’t really do that. Romney is a riddle wrapped in an enigma. Either he is really Mass-Mitt in conservative clothing, or he’s really flipped, or he’s really an etch-a-sketch. Or all three.

    I can see why a conservative would back him simply because he is odd-on more conservative than Obama … but it’s a bigger risk for even a centrist. We don’t know exactly how conservative he’d be, with whatever Congress he got.

    In that light, even if you trust markets, Obama is the safe bet.

  50. john personna says:

    (I might have voted for Mass-Mitt, but I don’t think anyone on the right can swear that’s what I’d be getting.)

  51. Dave E. says:

    @john personna: If we are are going to play the blame game, let’s get a few things right.

    – Dot Com bubble: Entirely a Clinton era phenomenon, 1995 or so to 2000.
    – Dot Com crash: Began a full year before Bush took office, 2000-2001.
    – Housing bubble: Began in the ’90s under Clinton.
    – Housing crash: The end of the Bush era.

    The housing bubble and crash was a bipartisan affair from beginning to end, and let’s not forget that a large chunk of the public was partying along most of the way too. Our leaders in both parties should have cooled the party down, but they didn’t and for the most part, we didn’t want them to.

  52. @Dave E.:

    I made my dot-com money after Bush took office. I exercised a lot of options at the top of the market, in 2000. How do you claim the crash started in 1999? I don’t see that in the SP 500 average.

    The housing bubble had arguably been building for 20 years in California, but it didn’t reach an inflection point until the free money days, NINJA loans and etc.

    So no, I think my first list was correct for “things that happened within”

    It was not a “blame game” anyway.

  53. @this:

    That said, there are things the Bush administration could have done better. They could have raised interest rates sooner after the dot-com crash. They could have been more vigilant in the securities markets.

    Those would probably not have prevented the crash, but having fed less nitro into the engine, the crash would have been at slower speed.

  54. Racehorse says:

    @Dave E.: With housing prices and interest rates at great prices, this is a great time to buy a house. But banks have really tightened up requirements so the result is a sluggish sales record. They should have tightened up back when housing prices were so inflated, but they made bad loans to people who obviously could not afford them. This is typical government planning and thinking: backward, bizarre, weird.

  55. Dave E. says:

    @john personna: I didn’t say 1999, I said 2000. I think it’s generally accepted that the height of the bubble is reflected in the NASDAQ peak of around 5000 in early 2000. About a year later the index had lost half its value. Not that all dot coms failed in that time, but the bubble was thoroughly deflated.

    The policies that created the housing bubble were put in place in the mid-90s and by 1998 the creation of the latest bubble, on a national scale, was in full swing. Absolutely the Bush administration could have done more, I don’t absolve them, but they had plenty of enablers on both sides of the aisle. Just take a look at the “Friends of Angelo.”

  56. @Dave E.:

    You said “Dot Com crash: Began a full year before Bush took office, 2000-2001.”

    A “full year” before 2000 is 1999

  57. Jack Moss says:

    Epic fail all around. And what about those numbers around blacks, hispanics and women.

    Unemployment rate for blacks jumps to 14.4%…
    Rate stuck at 11% for Hispanics…
    780,000 Fewer Women Employed Under Obama…

    But hey, the private sector is doing just fine!

  58. Dave E. says:

    @john personna: Bush took office in January of 2001.

  59. Dave E. says:

    @Racehorse: Agreed. I don’t see the market going down much more, but I also don’t see it improving at all until the employment picture improves. Even then, I worry about the millions of kids too burdened by student loans to qualify for a mortgage.

  60. wr says:

    @Racehorse: “But banks have really tightened up requirements so the result is a sluggish sales record. They should have tightened up back when housing prices were so inflated, but they made bad loans to people who obviously could not afford them. This is typical government planning and thinking: backward, bizarre, weird. ”

    You do understand that “government” and “the banks” are two separate things, right?

    Oh, wait. You probably don’t.

    Carry on.

  61. @Dave E.:

    Well in that case … 😉

  62. bandit says:

    @john personna: I can tell you some I wouldn’t have done

    Flexible Spending Account contributions will be capped at $2,500. Currently, there is no tax-related limit on how much you can set aside pre-tax to pay for medical expenses. Next year, there will be. If you have been socking away, say, $10,000 in your FSA to pay medical bills, you’ll have to cut that to $2,500.

    The itemized-deduction hurdle for medical expenses is going up to 10% of adjusted gross income. Right now, any medical expenses over 7.5% of AGI are deductible. Next year, that hurdle will be 10%.

    A”Medicine Cabinet Tax” that eliminates the ability to pay for over-the-counter medicines from a pre-tax Flexible Spending Account. This started in January 2011.

    A tax on medical devices costing more than $100. Starting in 2013, medical device manufacturers will have to pay a 2.3% excise tax on medical equipment.

  63. Dave E. says:

    @wr: Government run Fannie Mae and Freddie Mac have a large influence on prevailing lending standards in the mortgage market and they tightened things up considerably after 2008. In addition, the Fed sets capital requirements for banks that result in incentives to hold fewer less than prime loans. Government policy has a much greater effect on bank behavior than you apparently understand.

  64. An Interested Party says:

    …the short-term “solution” (which won’t fix the economy) is replace Obama with Romney; the long-term “solution” (which won’t fix the economy) is to appreciate that markets are the least imperfect mechanism (I believe that “perfect market theory” has actually been an albatross for conservative-libertarians).

    These are the “solutions” even though they won’t fix the economy? Frankly, that seems about as mindless as trying to pin all the blame on Bush or Obama….

  65. rudderpedals says:

    @Dave E.: Privatized Freddie and Fannie were too late to the game to make a material difference, you do remember how they were bemoaning a loss of market share to the private RMBS vendors. We’ve been through this already.

  66. @bandit:

    In the best of all worlds we’d have free money to pay for the poor. Baring that, it has to come from the non-poor. What you named are new burdens on the non-poor, yes.

  67. Moderate Mom says:

    @john personna:

    The dot com bubble inflated during Clinton’s terms and started to burst in March of 2000, which is months before George Bush was even elected (or handed the Presidency by the Supreme Court, depending on your political leanings) and by the time he took office in January of 2001, the dot com crash was complete for all practical purposes. I ought to know – I foolishly lost a lot of my kids’ college funds by allocating too much of them to tech stocks – in February of 2000. My bad.

  68. Drew says:

    @Dave E.:

    The tech heavy Nasdaq statistically peaked in March of 2000, as you point out, a full year before Bush took office.

    If you are looking for intellectual honesty from JP you will be waiting for Godot. It’s a long standing contortionist act.

  69. @Moderate Mom:

    OK I was off a little, but what I was really trying to say was that Bush’s long 8 years had a lot of economic conditions. I wouldn’t judge him either on that 8 year’s average or its end-to-end difference.

    Heck, he had 9/11. That certainly wasn’t his fault, and it certainly did have a huge economic impact.

    I fault him, and Greenspan, for specific things, but I don’t play the “term game.”

  70. @Drew:

    You should have read further, Drew. I acknowledge there error, and smiled, as soon as I saw it.

  71. PGlenn says:

    @An Interested Party: Is it not “mindless” to pull out of context two sentences from my comments, which are obviously referencing preceeding points, trying to distort what I was saying? We’re not running against each other for a political office. This a blog discussion. If you don’t want to discuss my points, that’s just fine. But why bother quoting me just to talk past (not to) me?

    If you’d read what led up to those two sentences, you’d have seen that I was criticizing the idea that presidents and/or technocrats could “fix” the economy – i.e. that they’d be able to devise the right mix of policy “solutions.” Here’s what I wrote:

    We do not believe, however, that governments can “fix” the economy in the sense that expert policymakers can approximate the perfect mixture of policy and regulatory instruments that will maximize economic growth and prosperity. Usually, the more ambitious attempts to fix (read: micromanage) the economy will cause more harm than good because the modern world is hyper-complex. Obviously, government is absolutely essential to the promotion of economic prosperity, but too often government attempts to do things it’s not very good at – heck, none of us are good at some of the things we expect government to perform.

    Thus, I referenced the short-term “solution” of electing Romney is quotes because it might be a political solution of sorts, but that does not mean that Romney or any other would-be president can fix all, or even much, of what possibly ails the economy. Too many variables.

    More realistically, an administration’s policies can have positive and negative impacts on the economy, but if many other forces are working against those policies, not only will the impacts of those policies possibly be offset; we might have no idea, even with benefit of hindsight, to what degree each respective policy had on the economy.

    Has Obama “fixed” the economy yet? Perhaps your answer is yes, but that the effects of this repair are delayed? That does not seem to be the case, though, because you’ve implied that it’s mindless to support Romney while believing he won’t fix the economy – if it’s already fixed, you might worry that he’ll unfix it, but no sense in sending him to fix something that ain’t broke.

    More likely, you believed that Obama has not yet fixed the economy. So what’s stopping him from doing so? My guess is that you’ll reply that he’s done the best he could with the cards he was dealt (Bush, GOP obstruction, difficult economic fundamentals, etc.) Fine, I don’t agree, but if his hand is poor enough, he won’t be able to fix it, right? And, hypothetically, if that’s the case, won’t you be just as mindless as I am if you vote for the “solution” of Obama even though he won’t be able to fix the economy?

    In reality, government has a vitally important role to play and the fact that presidents and/or technocrats cannot “fix” the economy does not mean that any policy is as good as any other, or that we cannot analyze potential policy effects, etc; but this idea that we send leaders to DC to “fix” the economy is not just unrealistic; from my point of view, it is much too consistent with a hands-on, micro-management vision of government.

    By all means disagree with me. Better yet, maybe you, yourself, have the “solutions” that will “fix” the economy? I know I don’t. Or, you know how Obama will go about “fixing” the economy with his policy “solutions” during his next term? Please enlighten us.

  72. @PGlenn:

    Both parties are all in for the majority. If Obama gets a Democratic Congress he probably will do more jobs funding. If Romney gets a Republican congress … well it’s anyone’s guess. He might just do Obama-ish things or he might go all Tea Party.

    Chances are though we’ll have no clear winner, a filibustered Congress … and what? A game of kick the can until 2016? Gawd I hope not.

  73. PGlenn says:

    john personna, good points, except that Obama has done quite a bit via “internal” administrative/bureaucratic directives, reforms (I forget the term for this) – e.g., EPA regulation of carbon emissions. Even assuming no clear winner and continued “gridlock,” we might expect Obama and Romney to issue significantly different “internal” directives, etc.

  74. Dave E. says:

    @rudderpedals: I don’t get your point. Fannie and Freddie were seized by the FHFA in 2008 and are still government controlled. They still, along with the FHA, exert enormous influence on lending standards because combined they buy or back something like 90% of all home loans.

    And if you think Fannie and Freddie were late to the game back when they were privatized GSEs, you need to take another look. Fannie Mae in particular was deep into the sub-prime as far back as the mid 90’s.

  75. al-Ameda says:

    @Jack Moss:

    Just so you know Jack, the epic failure – the one that we will be struggling to recover from for the next 5 to 10 years, occurred in 2008 with the calamitous crash of the financial and housing markets. About $14 Trillion in income and wealth was lost in the crash. The worst economic failure since the Great Depression, and the effect of which still plague Europe as well as America.

    Oh, the epic failure happened prior to Obama’s inaguration – now there’s an inconvenient fact for you.

  76. rudderpedals says:

    @Dave E.: We both seem to agree that private enterprise, not govt, were the culprits, We can quibble over details. I’m intrigued about your well taken point on the FHFA post-crash and whether you agree having a secondary market to buy new mortgages is a good thing. ISTM post crash there were/aew few buyers in the secondary market anymore and FHFA is a life support system.

  77. bandit says:

    @john personna: These are increased taxes all as the result of the ACA which aren’t pegged to income and take money directly out your post tax income. IIRC there wouldn’t be any taxes on families with incomes under $250k increasing the cost of health care. These are all taxes that affect the middle class which will reduce their disposable income.

  78. Dave E. says:

    @rudderpedals: “We both seem to agree that private enterprise, not govt, were the culprits…”

    No, that’s not what I meant. Even privatized, pre-crash Fannie and Freddie were still Government Sponsored Enterprises and very political organizations and very tied to government policy. By 2008 they had been for quite some time. Wall Street deserves its share of the blame, but the bubble was just as much a result of government policy as anything else.

    How the secondary market should work post-crash is a good question. For one thing, I think any transaction that isn’t transparent and easily unwound or transferred should be illegal.

  79. A. J. says:

    KEEPING IT THOUGHTFULLY HONEST: Another disingenuous and outrageous statements by these same obstructionist Republicans celebrating that many Middle Class Americans cannot find jobs!! Mr. Romney that contributed to millions of job losses through outsourcing/ off shoring while making his millions in profits and Boehner, Cantor and Kevin McCarthy, our boy from Bakersfield, California, that based upon your recorded of legislative priorities, you haven’t noticed for the past for years there is a need for 12.5 Million unemployed American that are asking what happen to the President’s Job Bill that was introduced last September to Congress for action to create economic growth and more jobs for unemployed Americans that he introduced during his State of Union Speech to the Congress? Do you remember? THE INCONVENIENT TRUTH : I recall that we has lost 8 million jobs in 2008 and now regarding another 84,000 low jobs report: Maybe you have forgotten because your supporters at the U.S CHAMBER OF COMMERCE (that should be called-The Communists China Chamber of Commerce) was the largest campaign contributor last year at $66.4 million dollars to create trade legislation to created so many jobs in Communists China and India, while displacing hundreds of thousands American workers in USA! According the data, over-all amount of pay-off to self serving corrupt politicians is $3.3 billion! And we wonder why there are NO new jobs being created in America? Mr. Romney, Boehner and Mr. McConnell, Middle Class Americans will remember you in November, the fact that your republican’s obstructionists in the Senate decide voted a record 137 filibusters to do nothing for the past three years!

  80. Liberty60 says:

    @john personna:
    I think you all are being unfair to the Republicans.

    They have done their best to change the unemployment numbers.

    Why, at the state and local levels they have laid off something like 700,000 employees.

    What more do you want?

  81. An Interested Party says:

    I know I don’t.

    Exactly…so suggesting that the “solution” is to elect Romney is more like saying you’d rather have your guy (grudgingly, but still) elected president rather than the other guy…perhaps “mindless” wasn’t the right word, mindlessly partisan, on the other hand…

    Both parties are all in for the majority. If Obama gets a Democratic Congress he probably will do more jobs funding. If Romney gets a Republican congress … well it’s anyone’s guess. He might just do Obama-ish things or he might go all Tea Party.

    Chances are though we’ll have no clear winner, a filibustered Congress … and what? A game of kick the can until 2016?

    There’s your answer, by the way…

  82. bandit says:

    @Liberty60: Maybe the bankrupt states and cities should hire them back with the money they don’t have?

  83. A. J. says:

    @Liberty60: @Liberty60: Hi John Personna , you deserve an answer. In 2007-08, our Country including the States, Cities, privated business went nearly Bankrupt due the playing casino boys on WAll Street under the watch of pres. Bush policies and Republicans in Congress. However, some people conveniently forget or wish to re-write factual history. Maybe you should Senator Bernie Sanders book or Dylan Radigan’s Greedy Basters or Tangle Webs byJames Stewart and find the truth of how our country is being sold out by Billionaires that rented the political Prostitutes in Congress!

  84. anjin-san says:

    Maybe the bankrupt states and cities should hire them back with the money they don’t have?

    Do you think bankrupt corporations never hire anyone?

  85. An Interested Party says:

    In 2007-08, our Country including the States, Cities, privated business went nearly Bankrupt due the playing casino boys on WAll Street under the watch of pres. Bush policies and Republicans in Congress.

    Of course, the evidence suggests that this scenario will repeat itself should Romney win the White House and Republicans gain control of Congress…

  86. A. J. says:

    KEEPING IT THOUGHTFULLY HONEST: More disingenuous and outrageous statements by these same obstructionist Republicans celebrating that many Middle Class Americans cannot find jobs!! Mr. Romney that contributed to millions of job losses through his Bain Capital outsourcing/ off shoring of American jobs while making his millions in profits! Boehner, Cantor and Kevin McCarthy, our boy from Bakersfield, California, based upon their record of legislative priorities, they haven’t noticed for the past four years there is a need for 12.5 Million unemployed American that have been asking what happen to the President’s Job Bill that was introduced last September to Congress? What action was taken to create economic growth and more jobs for unemployed Americans by the Congress? Do you remember? THE INCONVENIENT TRUTH: I recall that we has lost 8 million jobs in 2008 and now another 84,000 low jobs report: Maybe you have forgotten because your supporters at the U.S CHAMBER OF COMMERCE (that should be called-The Communists China Chamber of Commerce) was the largest campaign contributor last year at $66.4 million dollars to create trade legislation to created so many jobs in Communists China and India, while displacing hundreds of thousands American workers in USA! According the data, over-all amount of pay-off to self serving corrupt politicians was $3.3 billion! And we wonder why there are NO new jobs being created in America? Mr. Romney, Boehner and Mr. McConnell, Middle Class Americans will remember all of you in November, and the fact that your republican’s obstructionists in the Senate decide voted a record 137 filibusters to do nothing for the past three years! PAY BACK IS COMING!