Friday, February 03, 2012

Sign of the Apocalypse: Krugman turns on Obama

In a stunning and biting article in the New York Times, self-described liberal Paul Krugman lambastes the President for his tepid jobs record.  Check out “No More Excuses on Jobs” (slight editing by yours truly):
With all the debt they've racked up, the Obamites have precious little job creation to show for it. Though the onset of the recession was not their fault, the complete failure over three years to retrieve those lost jobs certainly is.
As job growth continues to elude the U.S. economy, we're hearing two main excuses from the Obama administration and its supporters: that the real situation is much better than you're hearing, and that to the extent employment is lagging, it's the result of factors outside the administration's control. But after three years of extravagant promises and dismal results, the time for excuses has passed.
Krugman notes that job creation has failed to keep up with population growth, resulting in a stagnant labor force.  Then he takes on today’s BLS report on a drop in the unemployment rate:
But wait - hasn't the unemployment rate fallen since last summer? Yes, but that's entirely the result of people dropping out of the labor force. Even if you're out of work, you're not counted as unemployed unless you're actively looking for a job.
We don't know why so many people have stopped looking for jobs, but it probably has something to do with the fact that jobs are so hard to find: 40 percent of the unemployed have been out of work more than 15 weeks, a 20-year record. In any case, the administration should feel grateful that so many people have dropped out. As the Economic Policy Institute points out, if they hadn't dropped out, the official unemployment rate would be an eye-popping 7.4 percent, not a politically spinnable 5.6 percent.
In short, things aren't as bad as they seem; they're worse.
On the point of a smaller labor force distorting the unemployment rate, Krugman is correct.  As Zero Hedge forcefully reported today: “No, that's not a typo: 1.2 million people dropped out of the labor force in one month!”  As Commentary noted, if the labor force in January 2012 had been the same as January 2011, the unemployment rate would have been an eye-popping 8.9% and not the merely troubling 8.3% rate reported today.  Tyler Durden at Zero Hedge goes even further and declares the unemployment rate is 11.5% once you strip away the BLS gimmicks.  As Krugman implies, no matter which figure you choose, it’s not politically spinnable.

One other thing: Krugman’s figures of long-term unemployment are much worse than he cites.  CNN is reporting that the percentage of long-term unemployed of people who have been out of work six months or more now stands at 42.9%.  But he is correct that it’s a depressing new record.
No sensible person blames Mr. Obama for the onset of the recession in 2008. But he does deserve blame for the fact that all he has to show for three years of supposed job-creation policies is a mountain of debt. 
And how.  Well, it’s refreshing to see Krugman give some balanced criticism for once.


Roger Bournival said...

You know, I'm really psyched to be reliving the Carter years...

Anne Alogy said...

I don't recall Gerald Ford crashing the economy.

Anonymous said...

Yeah, you're right--Carter did that all by himself.

Anonymous said...