The unemployment rate fell in January, which ought to be good news. But it isn’t. Over the past decade we’ve fallen into a strange and puzzling wonderland of opposites, where “economic recovery” comes with no growth and unemployment rates drop but people aren’t working.
Such a wonderland was discovered by Alice in Lewis Carroll’s playful tale. “If I had a world of my own,” Alice said, “everything would be nonsense. Nothing would be what it is because everything would be what it isn’t.”
President Obama lives in Alice’s world. He has company, his own council of economic advisers and a Congress ready to approve trillions in stimulus spending.
Congress submits to his demands to spend more and regulate more. The effects show up in the monthly economic reports.
The Commerce Department just announced that the official unemployment rate has fallen from 6.7 to 6.6 percent, and the economy created only 113,000 new jobs in January. Even the broader measure of unemployment known as U-6, which measures underemployment, declined from 13.1 to 12.7 percent.
In President Obama’s wonderland the numbers tell a tale of economic despair, not hope, and nothing changes.
After years of standing in unemployment lines, unable to find work, millions have given up. Only 63 percent of the population is currently employed or looking for work, down from 66 percent when Mr. Obama took office.
In the past year an additional 2.5 million Americans under the age of 55 abandoned the search for a job.
There’s also a noticeable gap in the statistics used to measure unemployment. The difference between the official unemployment rate and the broader U-6 measure is greater now than a year ago. Such gaps are a warning to trained economists that more economic trouble is brewing.
The latest manufacturing reports confirm the trend. Toward the end of last year, the economy began to bubble. Not much, but a little. Manufacturers began to build inventories and exporters enjoyed an uptick in sales.
But according to the Institute for Supply Management, factory activity is slowing again, down to its lowest level since May 2013. Construction workers are effectively idle, with a barely measurable growth rate of one-tenth of 1 percent in January.
For the economy to show growth, the indicators point sharply upward, but new regulations imposed by Obamacare and the Dodd-Frank Wall Street regulation bill keep the arrows pointed downward. The recent economic forecast by the nonpartisan Congressional Budget Office aptly explains how the market is responding, logically and rationally, to the perverse incentives of Obamacare.
Business firms cut hours for employees to evade harsh penalties, and workers shift to part-time work to get government subsidies. The economy struggles to increase productivity and the president and his administration impose new policies that discourage everyone.
The Dodd-Frank legislation saddles the economy with ever more costly red tape. The Federal Reserve’s easy money policy and its determination to hold interest rates at near-zero levels ensure that thrifty Americans, particularly the retired who keep their money in the bank, will see their savings shrink by inflation.
If only everyone could do as Alice finally did, and wake up from this “curious dream.” She had only to open her eyes to find happy summer days. But in the real world outside there’s only a cold wind and intermittent rain and snow.