Friday, October 7, 2011

The Poor Job Market: Obama's Challenge ran an interesting article on Friday, discussing the current unemployment rate and the poor state of the job market; the website requires a membership login but, as per usual, the article includes a nice teaser summarizing the key points.

Last month (September), employers in the U.S. added some 103,000 jobs.  (This news was surely embraced by those economists and commentators who eagerly watch for signs of economic improvement.) And, while 103,000 jobs is surely an improvement over the previous months' figures, it is still a somber (and sobering) indication that the U.S. economy remains on unstable footing.

According to the U.S. Department of Labor (DOL), the total number of unemployed Americans sits uncomfortably at some fourteen (14) million--a terrifically terrible number. In August, hiring in the private (which is to say, productive) economy stalled, leading some commentators to opine that we were beginning to enter another pronounced, and potentially, prolonged economic slump.  Recently, however, the Labor Department modified its estimate of the number of jobs created in August 2011: they had previously estimated the number at zero--yes, zilch--and now they are claiming the real number is 57,000.  While I certainly welcome that number of 57,000, I am forever dubious of the government's official numbers, excluding those from the GAO.

But, I return to the government's statistics--I mean, can I really ignore them?  Of course not!

The "National" unemployment rate hovers around 9%.  This statistic--a macro number--doesn't always afford the observer with a real indication of the true nature of the employment market.  To be sure, 9% remain without work, but the state of the job market remains more paralyzed and uncertain than any individual stat could reveal.

On the inflation front: according to the Bureau of Labor Statistics' always informative website, the Consumer Price Index rose 0.4 percent in August (as reported on September 15, 2011); unfortunately, numbers for September have yet to be released, although I am confident that they have been tabulated.  Interestingly, the food index itself rose 0.5 percent, after rising 0.4 percent in July.  The energy index rose 1.2 percent, after rising an uncomfortable 2.8 percent in July.  I will resist the temptation to provide analysis on these numbers, but I will say that it is important to keep a focus on the economic data, especially in the campaign season.

Not long ago, President Obama unveiled his "American Jobs Act," aimed at addressing at least a solid portion of the economic mess.  Two key tax measures included in this Act are: 1.) cutting the payroll tax cut in half for 98 percent of businesses and; 2.) a complete payroll tax holiday for added workers or increased wages.  Two non-tax reform measures are: 1.) modernizing at least 35,000 public schools across the country and; 2.) making immediate investments in infrastructure.  Expectedly, the Repubs responded in uniform opposition.

For many, the Obama presidency has been a failure on the domestic policy (i.e., economic policy) front.  While the stock market enjoys its roller coaster ride, overall data remain unimpressive, bordering on worrisome.  FED Chairman Ben Bernanke has emphasized the FED's willingness to intervene should the situation deteriorate, but he also has simultaneously encouraged Congress "to do more." Does he mean more fiscal stimulus or fiscal restraint?

The Repubs have capitalized on the economic situation and have exploited it for political benefit.  Obama's challenge remains the economy more broadly and the job market more specifically.  At 9.1% unemployment and not much indication that the number will be substantively reduced, the Repubs can claim that American needs a new policy path--a new trajectory.  Within Obama's challenge may exist the Repubs ultimate political tool.

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