As of now, I am in control here, in the White House

Obama’s Phantom Jobs Victory

The Labor Department announced Friday that the unemployment rate went down to 8.5 percent last month, and the sonorous thumping on the ceiling in the basement of the White House press room was, according to highly placed sources, the result delirious dancing in the aisles of the West Wing above it.

Okay, none of that is true, but it’s pretty clear the White House was buoyed by the news, and Republicans were left stammering, “Yes, but . . . ”

But . . .  yes but happens to be right.

The numbers were indeed nice, with 200,000 jobs created. But this pretty rainbow arching over the economic horizon obscures some frighteningly dark clouds that will continue to haunt President Obama’s reelection prospects.

I beg your pardon. I never promised you a Rose Garden. Oh wait, yes, I did. Photo by Keith Koffler

First of all, 200,000 is not crazy good, particularly during the holiday hiring season. It would take years at this rate to bring the unemployment rate down to the five percent range we had gotten used to. And even if hiring continues at around this pace – not at all guaranteed, given other economic factors – the unemployment rate will not continue to fall easily in the near term because people will start looking for jobs once more, and then they are counted again as among the jobless.

It still seems very unlikely we will be below or even at 8 percent by Election Day.

Certainly, there’s intense focus on unemployment as a political matter. Not only is this seen as a bellwether for the economy, but compassionate Americans actually do care for their fellow citizens. But there is little reason for optimism on several other indicators that carry major weight with voters.

First of all, the economy in 2012 is not expected to grow above 2.5 percent. It’s not a recession, but it does suck.

Gasoline prices are not going down anytime soon. They’ll likely remain at about their current level of in the mid-$3 range. And if the Iran situation explodes, fuhggedaboutit. Through the roof.

The housing market is going to remain sluggish next year, avoiding the Grand Recovery everyone is waiting for. So people will head over to Zillow sometime before Election Day and figure out their biggest investment is still a turkey.

What’s more, stocks are not expected to rise much, meaning that between stock values and home prices, no one is going to feel much richer.

Americans are also deeply worried about the federal deficit, which is about as likely to become trimmer as a pig on a chocolate-covered truffle farm. Obama will attempt to blame Republicans for this. But everyone knows who sets the agenda in Washington. It’s not the Speaker of the House.

Kiplinger, the widely respected financial advice and forecasting outfit, puts it succinctly:

The good showing in December likely isn’t the start of a surge. The labor market faces some high hurdles. Overseas growth is slowing in Asia, and Europe is sliding into a recession. In the U.S., housing demand remains weak, revenue-strapped local governments continue to lay off workers and businesses are slowing down their purchases of new equipment. As a result, gross domestic product will grow only about 2.3% in 2012, well short of the 4% or more that is typical in a recovery.

Obama has made many mistakes in his handling of the economy, which as a result will not be staging a strong rebound. There is an awful logic at work here that campaign consultants and spinmeisters will not be able to shoo away.

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30 Responses to Obama’s Phantom Jobs Victory

  1. So true! But AP and others (WaPo—we seee you) are teeing this up (sorry) to be a win for the little fellow if somehow the numbers can be made to look on the decrease or increase, depending. Here in the housing market, I heard there is a 1.5 percent increase–but most houses are 60% or more underwater. We are talking years. This is all spin spin spin. And when you spin that much, you throw up.

    • Contrary to popular opinion, becoming President at the trough of the business cycle is perfect timing. If you have reasonably good policies there will be a rubber band effect of GDP growth and job creation. People will be better off in 4 years and they will take that into account in the voting booth. Obama’s policies hindered a meaningful recovery.

  2. The GOP, whoever the candidate, needs to frame the entire election the way Reagan did in 1980 – http://www.youtube.com/watch?v=loBe0WXtts8.

    “Are you better off than you were four years ago?”

    A fifth of the unemployment drop has been attributed to the temp hiring of courier drivers. According to Bloomberg, “Delivery companies such as FedEx Corp. (FDX) and United Parcel Service Inc. (UPS) added 42,200 jobs to payrolls in December, about a fifth of the total for all employers last month. History indicates the gain will be followed by a similar-sized loss in January.” This is the same game that the WH played with the drop in 2010 and the census workers. Take ANY good news and make it sound fantastic, even when you know that it is only temporary.

    Look for an increase in unemployment in January, and if things go sideways in the Hormuz, look for a big jump, fifty cents to a dollar, in gas prices, and home heating.

    • There’s not going to be a situation in the Straights of Hormuz unless a nation other than the United States steps in. This group was reared on “conflict resolution” and would rather be cowed than act strong.

      • France’s carrier and 2 British destroyers are heading that way now, and if you check the Navy sites, we also have 2 other carrier groups going that way from the Pacific.Look for movements around the 26th of Jan

  3. So is this Bush’s fault oh no that’s just for bad things but this is if you tell the
    whole truth so confussed. You know I think we can all agree we are getting
    really tired of being taken for stupid it’s getting old and we will tell him in a few
    months.

  4. Didn’t Obama just announce troop reductions in the “tens of thousands” because the not-so-super committee couldn’t come up with $1 trillion in cuts? That will do wonders for the unemployment rate. Maybe the unemployment rate will be a moot point since, according to Donald Trump, Obama is going to start a war with Iran just in time to win the election.

  5. I promise–will not post this a third time–but it fit. From the usually pro-WH Center for Economic Policy and Research. I think this is why a lot of us “averages” with our half-empty malls, sleepless nights, fear and dread feel pretty darn crummy.

    Data Suggest Long-term Unemployment Substantially Higher than Official Level

    Washington, D.C.- The Great Recession pushed the share of the long-term unemployed (defined as being unemployed more than 6 months) to over 40 percent throughout 2010 and 2011. But, a new report from the Center for Economic and Policy Research shows that this standard measure estimate understates the extent of long-term hardship in the U.S. labor market.

    “Long-term unemployment rates have been at unprecedented levels for two years now, but the full group facing long-term hardship in the labor market is likely to be at least twice as high as the official figure,” said John Schmitt, a co-author of the paper and a senior economist at the Center for Economic and Policy Research.

    The report, “Down and Out: Measuring Long-term Hardship in the Labor Market,” proposes a broader definition of long-term unemployment that encompasses the underemployed and those workers experiencing long-term hardship in the labor market.

    The report expands on the official concept of unemployment by including data on discouraged workers — those not in the labor force who want a job but have stopped looking because they believe there are no jobs available; marginally attached workers — those who want a job and have looked in the past 12 months, but are not counted as unemployed because they haven’t looked in the last 4 weeks; and workers who are part-time for economic reasons – those who want a full time job but only have part-time work. Together with the unemployed, these groups are the basis for an alternative Bureau of Labor Statistics’ measure of unemployment, known as U-6, which the authors argue gives a more complete picture of long-term hardship.

    While the Bureau of Labor Statistics does not track the length of time workers have fallen under these categories, the authors demonstrate that under reasonable assumptions, the share of workers facing long-term hardship may be twice as high as the share that is long-term unemployed by the standard measure.

    Under these same assumptions, between 2007 and 2010, long-term unemployment increased almost as much in these unofficial channels as it did under the more narrow definition.

  6. ‘It’s not a recession, but it does suck.’

    Hmm… Did you really type that….?

    You’re not another paid reporter are you?

    Oh God…

  7. The number could drop to 0 and I will not vote for him. His foreign policies scare me. Not to mention his view of what America should be.

  8. I saw on FBN that 172,000 of these jobs were seasonal jobs. This makes the actual number 28,000. The person (I don’t remember his name) was on Cavuto and he said you cannot look at the unemployment numbers until the January or February numbers come out. He also said people weren’t looking due to the holidays and no one usually hires for real jobs at the end of the fiscal year.

    • Eric Bolling of FBN has some interesting numbers. Since unemployment has dropped from 9 to 8.5%, based on 153 million employed, a drop of 1/2 of one percent should be 765,000 jobs. The actual number added was 300K. Thus, his point is, there are 465,000 missing from these reports. Just cookin’ the numbers….

  9. I would like them to actually count how many people are out of work. The ones drawing benefits and the ones who have just given up. And this constant readjustment of the numbers for everything is so stupid, do they not think we are paying attention?

    They could also start counting food and gas for inflation as well and OMG medical bills! Something that cost me 25 last year is now costing me 90! And I just can’t wait for all the new surprises I’ll get at the drs office and pharmacy this year too! It’s like the gift that keeps on giving!

    • And there are those that have exhausted all their benefits, and are still looking but can’t find a job. Once the benefits are exhausted, you are dropped from the numbers and are counted as “given up.”

      i think a better count would be to include all those that have lost benefits and are now on food stamps and receiving some form of welfare but are able to work.

  10. This weekly jobs report is sounding eeriely like the daily ‘Nam body counts as “proof” we were wining the war. Jobs=Recovery. Nobody is talking about the velocity of money. Too heady for this Community organizer for sure.
    What this President has presided over, in a very naive way I might add, is WEALTH DESTRUCTION. Everlything, except gold of course, is worth less or is taken over or regulated by the government. Even lunch with the president is worth less; all one needs is 3 bucks.