This sounds like good news. The Bureau of Labor Statistics reported Friday that the unemployment rate dropped from 7.6 percent to 7.4 percent in July as the economy expanded with 162,000 jobs. If that sounds too good to be true, that's because it is.
Most of the "improvement" in the official unemployment rate can be traced to the 136,000 people who abandoned the unemployment lines — not because they've found new careers, but because after weeks and weeks of searching they concluded that the effort is futile. The Labor Department no longer considers them unemployed; 4.2 million of them have been in the unemployment lines for more than 27 weeks. This number hasn't improved, nor has the employment-population ratio, which holds steady at 58.7 percent. These figures would have changed in a true recovery.
The White House is desperate to find something, anything, that would signal we're better off than we were 4 years ago. Housing starts are on the rise, and Ford, the only American automobile company that didn't take a government bailout, reports solid earnings from rising sales of politically incorrect pickup trucks.
Otherwise, after another month of Obamanomics, key economic indicators continue to fall. Wages fell, depriving households of the cash they need to deal with the rising price of essentials, like gasoline. Consumer confidence, or lack of it, is reflected in the dip in the Conference Board's Confidence Index, from 82.1 to 80.2.
Factory orders, a leading indicator of economic performance, rose far less than expected, by a paltry 1.5 percent, driven by the volatile aircraft sector. If transportation is excluded from the equation, factory orders actually decreased by 0.4 percent, and consumer-goods orders fell 0.7 percent.
Overall, the economy grew 1.7 percent in the second quarter. That sounds positive, but the first quarter's growth rate was revised down to 1.1 percent, leaving this year's performance substantially lower than last year's growth rate of 2.8 percent. Adjusting for inflation, gross domestic product has increased just 9 percent since the official start of the "recovery" in June 2009. That compares to the blockbuster 22 percent growth maintained during the Reagan recovery from the bottom of the 1981 recession, according to the calculation of the Minneapolis branch of the Federal Reserve Bank, which used Bureau of Economic Analysis data.
The administration doesn't want anyone to ask why we're not seeing blockbuster recovery numbers this time. Much of the blame for the latest malaise can be attributed to the higher taxes that became effective at the beginning of the year. American families, facing rising prices and no raises, felt the government take a bigger bite out of their paychecks.
Businesses burdened by higher taxes are struggling now with the uncertainty of the implementation of Obamacare. The vague estimates of how much it's going to cost deprives CEOs of the ability to plan ahead. Instead of hiring and expanding, they're waiting to see what happens, which is only prudent. Smaller companies now have a permanent incentive to avoid hiring full-time employees and assuming enormous Obamacare obligations.
The question hovering over the economy is how long will President Obama continue these destructive policies. The tax-and-spend stimulus failed. He has to try something different. Instead of tax-and-spend, and spend some more, he should try restraint, a lot of restraint. But even a little would be a good first step.
The Washington Times