It was only a month ago that the Obama administration was reassuring us that the economy was on the right track.
Then the Department of Labor (PDF) released its latest jobs numbers. Now the only reason for optimism might be numbers so frighteningly bad that maybe they’ll start talking about unemployment again in Washington and spend less time worrying about the impact of the deficit in the year 2030.
The U.S. economy added only 54,000 jobs in May. That compares to the 220,000 or so jobs the economy had added in each of the last three months.
May’s numbers were so anemic that the president, speaking at a Chrysler plant in Toledo, Ohio, compared the U.S. economy to a guy getting “hit by a truck”—or maybe a person suffering a “bad illness.”
“It’s going to take a while for you to mend,” Obama said. “And that’s what’s happened to our economy. It’s taking a while to mend.”
Friday’s glum jobs report capped a week of lousy news for the U.S. economy. The drumbeat of bad tidings began Tuesday, with yet more depressing news about the housing market. For the eighth month in a row, home prices had fallen in the country’s 20 largest cities.
And for the eighth month in a row, the Obama administration had no real answer to a foreclosure problem as bad today as it was two years ago, if not worse.
Two years ago analysts were predicting that home prices had hit bottom. But they declined by 4.2 percent in the first quarter of 2011, according to Standard & Poor’s, which maintains a residential real-estate measure it calls the Case-Shiller Home Price Index. That comes after falling 3.6 percent in the last three months of 2010.
“Home prices,” said the S&P’s David Blitzer, “continue on their downward spiral with no relief in sight.”
On Wednesday, the bad news came in the form of numbers underscoring that ours is an economy running out of steam. Factory orders were down after making a brief recovery earlier in the year. So, too, were auto sales, and not just among Japanese automakers still struggling with post-tsunami shortages.
The stock market fell by more than 200 points on Wednesday, its biggest drop in nine months.
Is it any wonder, then, that Obama’s people were out on the hustings on Friday downplaying the latest jobs report? It’s risky investing too much in a single month’s worth of data, they said, and they’re right—except the May numbers weren’t quite the anomaly the Obama-ites made them out to be.
The economy grew at an annualized rate of only 1.8 percent in the first three months of 2011, enough to ensure that the unemployment rate, which today hovers at just above 9 percent, remains depressingly high. Back in May, David Leonhardt, who won the Pulitzer Prize for his insightful columns in The New York Times explaining the economy, noted the parallel between the first few months of 2011 and the start of 2010, when the economy was growing at an equally anemic rate of 1.7 percent. (David is a former colleague with whom I was friendly.)
On Friday, Austan Goolsbee, Obama’s chief economist, was talking about the “small bump” in the road to recovery. That same day Leonhardt tweeted to his 6,000 followers, “2011 looks sadly like 2010 right now: a recovery that starts and then fades.”
The jobs numbers are more depressing still the deeper one digs. The big fear is that hard times and economic displacement—manufacturing jobs that have left for good, sectors upended by technology—will create a kind of permanent unemployed class, and these latest numbers show that 45 percent of the unemployed had been out of work for at least six months. (That’s 6.2 million people.) Unemployment among African Americans topped 16 percent, up from 15.5 percent a year earlier, and teenage unemployment was 24.2 percent.
And then there’s the lack of hiring among businesses with 500 or fewer employees. On Tuesday the National Federation of Independent Business (NFIB) will release its monthly snapshot of the country’s small business owner. That promises to be another grim offering on top of the other dismal news.
Traditionally, small-business owners have guided us out of recessions, but after a few good months to start the year, according to the NFIB, small-business optimism has fizzled.
“Meaningful job creation on Main Street has collapsed,” said William C. Dunkelberg, the organization’s chief economist, in advance of the release of its monthly survey.
Maybe the most depressing news can’t be found in any spreadsheets. That’s the political reality dictating that the tools available for tackling the unemployment problem are not available to policymakers. The conventional solution to high unemployment is stimulus spending, but politically that’s off the table. The 2009 stimulus package was significantly smaller than the one the Obama administration sought—significantly smaller than many economists were suggesting—and these days the issue is a nonstarter.
Therein might be an upside to so much bad news at once. For months now, Washington has been obsessed with the inevitability of frightening deficits 20 or 30 years off, while the unemployed have received scant attention. So there’s hope to be found in this snippet from the news report the Times ran on its front page on Saturday:
“Some pressure is building on the Obama administration and Congress to delay federal spending cuts, which economists say will weigh down the fragile recovery. Liberal groups have renewed their calls for more aid to states and more aggressive action from the Federal Reserve.”
At least there’s signs of fight on behalf of that large portion of the populace desperate for a decent job.
Journalist Gary Rivlin is the author of five books, including Broke, USA: From Pawnshops to Poverty, Inc.—How the Working Poor Became Big Business. He has worked as a staff reporter for The New York Times, where his beats included Silicon Valley and New Orleans after Hurricane Katrina. He is a special correspondent for Newsweek and The Daily Beast.