I don’t mind other guys dancing with my girl. That’s fine, I know them all pretty well. But I know sometimes I must get out in the light, better leave her behind with the kids, they’re alright. The kids are alright. When I was in college, we had only one rule in the dorm. Never turn down the Who. Much to my wife’s chagrin, the rule still applies in our car.
Today, yet another awe inspiring jobs report came out. Not only did the US economy add only about 80,000 jobs in June, but the anemic numbers for April and May were revised downward. The kids are definitely not alright.
The American economy is not in low gear anymore, it has slid into park. The economy is not in recession, but it is sure not moving forward. And honestly, this economist can’t seem to see much on the near term horizon to change things. The regulatory and tax environments remain unstable, businesses see no reason to invest in people or things, and no matter how much the government wants to invest there is no exogenous force or new technology like electricity or railroads or even the internet to jump start the economy.
No matter what the gnomes at the Federal Reserve want us to believe, lowering interest rates and printing money in an environment like this has no impact and will not improve the economic environment in the short term, and will likely harm it in the long term.
I don’t envy President Obama right now. Obviously the country is going to go into booms and busts, and you can’t blame a President for that. You can’t blame the current one and you can’t blame his predecessor. You also can’t really give the President (or Washington as a whole) much credit for a booming economy. I also can’t blame the President all that much for the lousy advice that he has received from his economic advisors. Honestly, the economics profession creates people like Larry Summers, Christina Romer and Austan Goolsbee. The President is a lawyer and a community organizer – whatever that is – and really should not be educated in the nuances of economic thought. But honestly, I would think that most community organizers can see how bad things are just by, well talking to the community.
Of course, Washington never sees a problem like normal people do. Today, the President stated that we had taken a Step in the right direction when he signed yet another large government spending bill. This follow his earlier, rather embarrassing statement that the private sector was doing just fine. Of course the President can control government spending and jobs and can’t do a whole lot about private investment and jobs in the short term, but right now he is showing us how confused even a truly educated and well informed person can be about the economy.
In fact, as data from the Bureau of Labor Statistics show, the recession is a private sector recession. As the chart below shows the kids are alright when it comes to the government. In fact, government employment has held fairly steady over the past two decades while private sector employment grew. Then the recession hit and, well government employment held steady while private employment collapsed.
As the economy has stumbled along after the recession, private sector employment has indeed picked up, but it is still well below the November 2007 peak. To say the private sector is doing well is like saying that a boxer is still standing after eight rounds in the ring. He may be bloody, his lip may be swollen, and the trainer may have just cut his eye open, but hey, he’s doing just fine.
I wish the kids were alright, but until somebody decides that the President of the United States (be it Mr. Obama or Mr. Romney) should have a decent economic team advising him I think we are in for a very long summer.