The Economic Blues
The economic forecast for the United States is not exactly sunny. The May jobs report indicates that employers are hiring at a restrained pace as they still feel uncomfortable hiring due to the weak economy. Though May’s jobs numbers were a slight improvement on April’s, 175,000 from 149,000 respectively, May’s jobs growth falls in line with average job growth over the past three years.
The unemployment rate shows an “economy running in place,” explains Heritage’s James Sherk. And to boot, millions of Americans have left the labor force altogether, and there are few signs that they will return any time soon. This makes unemployment numbers look smaller:
The fact that unemployment rose but the employment-to-population ratio did not rise illustrates a larger problem facing the economy: While unemployment has dropped, the proportion of Americans with jobs has scarcely increased since the recession ended. Unemployment looks better only because millions of Americans are no longer looking for work and thus do not count as unemployed.
The economic picture is entirely unimpressive.
Why are employers and job seekers still in a rut? One report indicates a major reason for fear among employers is Obamacare:
Businesses are citing concerns about the cost of health care reform rules, set to go into effect next year, as a major unknown keeping them on the edge.
Heritage has already made the same point:
Obamacare imposes new costs and restrictions on business owners. It can be no surprise that many of these owners—particularly smaller companies—have decided to delay expansion and new hires. Regrettably, the harmful impact of Obamacare on the labor market is only going to increase.
What else, besides Obamacare, has contributed to this economic malaise? President Obama’s “stimulus” – i.e. big-government spending binge – certainly has not helped as much as the White House estimated back in 2009, as this below graph indicates:
The actions of President Obama and the federal government, on the other hand, have weakened the economy:
Government policies that have raised taxes and increased regulatory burdens have weakened the desire for businesses to expand hiring.
Similarly, the Examiner explains:
Why is the Obama recovery the weakest recovery since the Great Depression? According to a new study by the Federal Reserve Bank of San Francisco, it is not because the federal government failed to borrow and spend too little during the height of the economic downturn.
In fact, the San Francisco Fed reports that “federal fiscal policy was unusually expansionary during the Great Recession” thanks largely to the “American Recovery and Reinvestment Act, the economic stimulus program passed by Congress in 2009. As a consequence, federal government saving in the recession fell faster—that is, the deficit grew faster—than our historical norm would predict.”
Perhaps it is time we try something different.