Saturday, July 23, 2016

Democrats Gather; Get Ready for Economy Happy Talk

“Anybody who says we are not absolutely better off today than we were just seven years ago, they’re not leveling with you. They’re not telling the truth. By almost every economic measure, we are significantly better off.”

Barack Obama

Deroy Murdock, in the conservative New York Post, concedes that:
Obama certainly can boast about the unemployment rate. From his Jan. 20, 2009, inauguration until last month that figure has fallen from 7.8% to 4.9% — down 37.2%.
And the stock market is booming. This week, Wall St. recorded all-time highs for both the Dow and the S&P 500, while the NASDAQ rose above its one-time-never-to-be-matched high of 5,049, first reached in March 2000.

The Dow closed the week at 18,571, the S&P 500 ended at 2,175, and the NASDAQ at 5,100. The combined total for the three indexes was 25,846. The New Fox Index -- which captures movement into stock market “outer space” first achieved in May 2013, the escape velocity attained by soaring past old-time market theoretical limits of a Dow of 15,000, an S&P 500 of 1,600, and a NASDAQ of 3,500, for a total of 20,100 -- hit +5,846 (see chart). 

But, Murdock adds, for a second opinion on the Obama economy, just ask the president's own economic adviser Robert Wolf, who told CNN: “I don’t think anyone is saying the economy is great right now.”

By almost every economic measure, Murdock asserts, America is flat to falling:
  • The labor force participation rate over that period has slid from 65.7% to 62.6% (the lowest reading since March 1978) — down 4.6%.   [corrected to today's current low]
  • On Obama’s watch, the percentage of Americans below the poverty line has grown, according to the most recent Census data, from 14.3% to 14.8%  in 2014 — up 3.5%. 
  • Real median household income across that interval sank from $54,925 to $53,657 — down 2.3%.   
  • Food Stamp participants soared in that time frame from 32,889,000 to 45,874,000 — up 39.5%.   
  • From Obama’s arrival through 2015, the percentage of Americans who own homes sagged from 67.3% to 63.8% — down 5.2%. 
  • Since the recession ended in mid-2009, real GDP has grown 14.5%, an annual rate of 2.1%. Other post-1960 recoveries averaged 28.4% total (annual rate of 3.9%) over a comparable 26 quarters. The Reagan recovery of the 1980s saw real GDP jump 35%, an annual rate of 4.7%. 
Also, Murdock quotes Gallup CEO Jim Clifton:
For the first time in 35 years, American business deaths now outnumber business births. Business startups outpaced business failures by about 100,000 per year until 2008. But [since 2009], that number suddenly reversed, and the net number of US startups versus closures is minus 70,000.
entrepreneurship is now in decline for the first time since the US government started measuring it . . .Small and medium-sized businesses are dying faster than they’re being born. So is free enterprise. And when free enterprise dies, America dies with it. 
Conservative economist Stephen Moore, writing in the Investors Business Daily, echoed Murdock’s theme:
the litany of economic failures during the Obama years[:] We have had $8 trillion of new debt, . . . Obamacare, an $800 billion stimulus plan with "shovel-ready" projects, tax increases on the rich, more than $100 billion in green energy subsidies, auto company and union pension bailouts, re-regulation of the financial industry and banks, and a Fed that has manufactured near-zero short term interest rates for seven years with up to $4 trillion of bond acquisitions. All of these were designed primarily to redistribute income. . .
The left's defense of growth anemia is that 2% growth is the new normal.
Comment: Job growth since Obama’s inauguration has averaged 114,000 a month. The economy has to add 145,000 jobs a month to hold the unemployment rate steady while keeping up with labor force growth. Over the past three months, which included a terrible May, the U.S. economy averaged 147,000 new jobs a month—slightly above the minimum.

The unemployment rate is down in a time of such low job growth because people who stop looking for work don't count as unemployed.  That's why the labor force participation rate decline of 4.6% under Obama is so important.

As for the stock market, the Federal Reserve’s near-zero interest rates have juiced the market with funds finding nowhere else to go. And while Democrats preach helping the middle class, it’s primarily the rich who benefit from this stock market on steroids.

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