No FDR Economic Recovery for Obama, Just Continued Recession

Posted by PITHOCRATES - June 3rd, 2011

Double-Dip Recession or just one Long Recession?

The Great Recession ended in July of 2009.  According to the economists.  And the Obama administration.  The U.S. unemployment rate at that time was 9.4%.  After the recession ended, the unemployment rate peaked at 10.1%.  And stayed at about 10% for the rest of the year.  A year later, it tumbled all the way down to 9.4%.  And kept falling.  All the way down to 9%.  Until last month (see U.S. unemployment rate up in May by CBC News posted 6/3/2011 on CBC News).

Employment rose by only 54,000 jobs in May, raising the unemployment rate to 9.1 per cent, the U.S. Bureau of Labour Statistics reported Friday.

The April rate was nine per cent.

The May report said 13.9 million Americans are officially unemployed, and another 8.5 million (sometimes called involuntary part-time workers) are working fewer hours than they want. Those people are working part-time because their hours had been cut back or because they couldn’t find a full-time job.

That’s right, it went back up.  There’s talk about a double-dip recession.  But with these unemployment rates holding so high for so many years?  From before the recession ended, to when the recession ended and to almost 2 years after it ended, I got to tell you.  I don’t think it ever ended.  These are record unemployment rates.  The kind of rates that typically only happen during the worst of recessions.

But it’s worse than this number shows.  There are another 8.5 million underemployed because they can’t find a full time job.  Add them in and the rate jumps to 15.8%.  This is a more accurate number.  It tells us the percentage of people who can’t find a full time job.  It’s bad out there.  Real bad. 

Small Business not Hiring but Cutting Workers

And it gets worse.  The job engine of America, small business, isn’t hiring either.  Worse, they’re planning to let people go (see NFIB: Small Business Hiring Stalls in May by Reuters posted 6/3/2011 on FOX Small Business).

Hiring by small businesses stalled in May and there was a small increase in the number of employers planning to cut their workforces, a survey showed in Thursday, another signal the labor market has lost steam.

The National Federation of Independent Business said its survey of 733 small businesses found that the average number of net new jobs slipped to 0.01 per firm from 0.04 in April…

“There were fewer increases and more reports of shrinkage in workforces, with 10% increasing employment an average of 3.2 employees per firm and 13% reducing employment an average of 3.1 employees, seasonally adjusted,” the NFIB said.

Of course small business isn’t hiring because they’re small business.  With small budgets.  And small margins.  Inflation hits them hard.  As well as their customers.  Prices go up everywhere.  Customers buy less.  And businesses pay more in costs.  Putting incredible pressures on their margins.  And those lucky enough to have business don’t dare hire anyone.  Because they have no idea what new law or regulation will come out of Washington next. 

The Obamacare legislation is about a thousand pages long.  And confusing as hell.  Business owners do know that it will be costly (evidenced by the request for waivers).  And that’s only for what they already know is in it.  They’re terrified for what they don’t know is in it.  Or what other surprises Washington will drop on them next.  This is not a good time for anyone operating under small margins.  Or a good time to hire people.

Stocks Tumble, Investors Retreat to Bond Market despite Fears about Technical Default

The numbers are so bad that investors are running from the stock market back into the safe haven of bonds (see Stocks fall after weak jobs report by Daniel Wagner, Associated Press, posted 6/3/2011 on USA Today).

Stocks around the globe dropped Friday after a weak report on U.S. employment worsened concerns that the economic recovery is losing steam…

The yield on the 10-year Treasury note fell to 3.00% from 3.03% late Thursday as investors rushed into the safety of government bonds. Yields fall as bond prices rise…

The yield on the 10-year Treasury note, a benchmark for many kinds of business and consumer borrowing, dipped below the psychologically important level of 3% during Wednesday’s broad stock sell-off.

It would appear these investors aren’t all that worried about a technical default if Congress doesn’t raise the debt ceiling.  They have more pressing concerns on their mind.  Such as the horrible unemployment numbers.  And an economy in recession.  For all the doom and gloom about what will happen in a technical default pales next to what is happening in the economy. 

With no Adolf Hitler there will be no FDR Economic Recovery

For those of you too young to know what it was like during the Great Depression, and I’m guessing that’s all of you, here’s your chance to relive some history.  Now, contrary to popular belief, FDR did not end the Great Depression.  All that Keynesian spending did nothing.  All those government make-work New Deal programs did nothing.  No.  One man ended the Great Depression.  And it wasn’t FDR.  It was Adolf Hitler.

Hitler plunged the world into war.  Caught most people with their pants down.  While he built a modern war machine few other nations did.  Other than the Japanese.  So the world had to play catch up.  Build ships, planes, rifles, artillery, ammunition, trucks, jeeps, etc.  And the nations that really needed these things were under attack.  Which left only one economy that was untouched by war.  Which also happened to be the world’s largest economy.  The United States.

The FDR administration told American industry they could do what they do best.  And they would get out of the way.  They let them make a profit.  Whatever they wanted.  As long as they delivered the impossible.  Which they did.  We called it the Arsenal of Democracy.  The war production was incredible.  Factories worked around the clock.  And built so much war material that the Nazis and Japanese didn’t have a chance.  The Allies could easily replace their material losses.  They couldn’t.  And the factories kept humming after the war.  For another decade or so.  Until the war-devastated economies rebuilt themselves.

So Obama and FDR have a lot in common.  Failed economic policies.  And ongoing war.  The only difference is that today’s war is unconventional.  There isn’t an enemy out there with a massive army conquering our friends and allies.  It’s more guerilla war.  Hit and run.  And terrorist attacks.  Which the U.S. is leading the fight against.  And the funding for.  So Obama can’t enjoy an FDR recovery.  Our friends and allies aren’t picking up this war tab.  Which means the economy will continue to limp along.  As it has been.  Since 2008.   A lot like FDR’s Great Depression.  Only without the economic recovery.  Which Hitler gifted FDR.  By giving us World War II.

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