There's not much to cheer in our scrappy election campaign. We hear that more than 4.4 million private sector jobs have been added in 28 straight months of job growth, and that the president is taking "aggressive steps to put Americans back to work." The happy talk invites a slogan from the 1984 election: "Where's the beef?"
The assessment that the U.S. economy is "stuck in the mud," just given to lawmakers by Federal Reserve Chairman Ben Bernanke, underscores yet again that there has been no recovery since the theoretical ending of the recession in June 2009. For the 80 percent of Americans who were born after World War II, this is their Depression.
The most dismaying signal of a weakening economy came from the American consumer, as retail sales fell a stunning 0.5 percent in June, far below the expectation for a 0.2 percent increase. An astounding 70 percent of retailers missed their sales targets in June, reflecting the most difficult month since November 2009. The retail weakness was broad-based, and indicators were down dramatically from the first quarter, as June represented the third month in a row that retail sales have weakened. In the past when retail sales were down three consecutive months, it was a signal of an oncoming recession. The result is that the underlying trend in GDP growth is barely above 1 percent.
What we have been living through is a breakdown of the great American jobs machine. Jobs have long been the best social program, the best economic program, and the best family program in America. No longer. The jobs are not there. Unemployment today is the worst since the Great Depression.
The unemployment statistics may be mind-numbing in the effort to portray the complexities of the national picture beyond the simple—and misleading—routine headline figures. It is very important, however, that we should understand just where we are and what the figures tell us about where we are heading. The headline unemployment number focused on by the media is 8.2 percent, but that's not the real number. If you add to the headline number the "discouraged workers" not currently looking for a job, and others "marginally attached" to the labor force, the unemployment rate would be almost 10 percent. And if you add involuntary part-time workers to the headline number, the real unemployment rate would be 14.9 percent. Fifty percent of the jobs created since the recession have been part time, which generally means that these workers receive no benefits and that their pay is inadequate to enter the middle class.
All the net jobs created during the Obama administration have been part-time jobs. An estimated 35 million Americans are trapped in jobs they would have left in better times. Fewer Americans are working today than in the year 2000, despite the fact that our population has grown by 31 million and our labor force by 11.4 million since then.
The Obama campaign emphasizes that "for years before the economic crisis," middle-class security had been slipping away because of stagnant wages and soaring healthcare costs. It's true that even before the start of the Iraq war in 2003 we had problems (education and fiscal control), but the record of the last four years is worrying. The unemployment rate under President Obama has averaged over 9 percent. Under George W. Bush, his predecessor, the jobless rate averaged 5.3 percent and was at 6.8 percent in the month his party lost the 2008 election. Job seekers are only one third as likely to find a job as before Obama was elected. A record number have been out of work for over six months. Hiring plans have sunk to the lowest reading since the third quarter of 2009, and only 26 percent of American companies plan to boost their compensation, the lowest since the depth of the last recession, as reported by David Rosenberg, chief economist of Gluskin Sheff.
Today a record number of households have at least one member looking for a job. The average private sector workweek is 34.5 hours. If not for the relatively short workweek, the jobless rate would be even higher. Another pattern that has emerged is that companies are asking employees to take unpaid leave, and this doesn't count toward the unemployment rates.
Many blue-collar workers and many in the middle class feel they are falling further and further behind, no matter how hard they work. Millions of families are one layoff or one medical emergency away from going into bankruptcy. It is no wonder that the great American dream is no longer a house in the suburbs. It is now a secure job and any job will do.
Another depressant has been the drop of some 40 percent in the net worth of the average American family over the last five years. These are Depression-like statistics. The baby boomers who are now entering their 60s are at the epicenter of the tragic collapse of their net worth. They have scaled down their expectations and their expenditures, particularly as they worry about their departure from the workforce.
It takes time for a slump in household net worth to fully register, but it inevitably results in a drawn-out but profound effect on consumer spending patterns, as frugality becomes the new and lasting behavior. One reaction is to get out of debt as fast as possible, and indeed the ratio of household debt to after-tax income has dropped from 130 percent at its peak in the third quarter of 2007 to approximately 114 percent today.
Americans feel deflated by the numbers and the bleak small business sentiment. According to a Gallup survey last fall, 81 percent of Americans said they were dissatisfied with the way the nation was being governed, and 65 percent of people in a Rasmussen poll this month said they believe the country is on the wrong track.
The future of the unemployed is dubious, for when economic activity picks up, employers will undoubtedly first choose to increase hours for existing workers. Many unemployed workers looking for jobs once the recovery really begins will discover that jobs as good as the ones they lost are almost impossible to find.
On top of that, the business community has been alienated since the Obama administration abandoned early efforts to build confidence and rally the national will. It engaged, instead, in demeaning the private sector. America typically boos the losers, but this has become an administration that boos the winners.
Key question: How will we find a way to have at least 500,000 more hires per month than we are now seeing? We have recovered less than 20 percent of the jobs lost in the recession, compared to previous recoveries in which over 100 percent of the jobs lost were recouped. This recession has shown employers that they can make do with fewer workers. Over 20 percent of companies say that employment in their firms will never return to pre-recession levels. Just as serious is that most of the newly available jobs don't match the pay, the hours, or the benefits of the millions of positions that vanished during the recession.
Millions of Americans are facing a lost decade, living from paycheck to paycheck, struggling to pay their bills, having to borrow money. They face a frightening future with deepening anxiety.
Los Angeles Times columnist Doyle McManus has raised the question: Can the president persuade voters to let him keep his job when so many of them have lost theirs? The buck stops with the president, and the latest opinion poll by CBS and the New York Times suggests he is paying a price for our disappointing recovery.