Federal Reserve Board Chairman Ben S. Bernanke sent President Obama a report card this week, giving him another failing grade on the economy.
Of course, Mr. Bernanke never mentioned Mr. Obama by name, but the Fed chairman’s gloomy description of an economy that is slowing down this year, and his announcement that the Fed will continue its costly stimulus to prop it up for the foreseeable future, was vivid testimony that the president has been an unmitigated failure on restoring the economy to its former prosperity.
Mr. Bernanke’s assessment to the nation Wednesday essentially declared that the Obama economy was “too weak to stand on its own,” The Washington Post reported in a front-page story about the Fed’s decision.
The economic data presented by the Fed clearly shows we’ve made mediocre progress under Mr. Obama’s impotent stimulus policies. It forecasts the economy will grow in the low 2 percent range (i.e., barely crawling) this year, below the modest 2.6 percent growth rate it predicted earlier this summer.
While the official unemployment rate has fallen to 7.3 percent, Mr. Bernanke acknowledged that a lot of the decline was a result of millions of discouraged, long-term-unemployed Americans, who were not actively looking for work and thus are no longer counted among the jobless.
The Fed predicts unemployment may fall into the 6 percent range next year, but it has made forecasts like this before only to see the jobless rate stuck above 7 percent in the fifth year of the Obama presidency.
The real underemployment figure, of course, is much higher. It combines the unemployment percentage with the large number of part-timers who want but cannot find full-time jobs, and discouraged workers who have dropped out of the labor force. That’s now around 14 percent.
Despite the Fed’s forecasts for next year, it is hedging its bets, promising to keep its short-term interest near zero until unemployment actually falls to 6.5 percent. Don’t hold your breath. The number of jobs needed to shrink the unemployment rate to 6.5 percent cannot possibly be reached in an economy barely growing at 2 percent or less.
The Conference Board’s latest economic-growth forecast says the slowing economy grew no more than 2 percent in third quarter and will grow by 1.6 percent for all of 2013.
It doesn’t get reported on the nightly news, but signs of a weakening economy are all around us, from lackluster housing starts to the declining number of full-time jobs as employers reduce their workforces to escape higher health care costs imposed by Obamacare. Housing starts rose at a mere 0.9 percent in August, a weaker rate than previously forecast, the U.S. Commerce Department said this week.
Consumers, whose purchasing power makes up two-thirds of the economy, are more cautious in their spending habits lately, and retail sales are weak. The Business Roundtable’s economic-outlook index fell to 79.1 in the third quarter. That’s down from a one-year high of 84.3 in the previous quarter. Incomes have been flat or in decline, as food costs, gas prices and other living expenses continue to rise.
The American people do not need to read the latest business indexes to know how the weak Obama economy has been affecting their daily lives. They’re telling pollsters that this economy stinks, and they’re blaming the president and his policies. “Despite Obama’s renewed focus on the economy this summer, he scores worse with Americans on the economy than he did in June,” says the Gallup Poll. Mr. Obama’s approval rating on the economy, which fell last month to a low of 35 percent, was “down seven percentage points,” Gallup said.
That poll on the nation’s No. 1 issue hit the White House hard, forcing the president to deliver a long, rambling, excuse-filled speech about it on Monday. It was filled with the same old complaints about the richest 1 percent, businesses making record profits, and a familiar litany of plans he’s put forth to improve the economy that have been rejected or ignored in Congress.
He had lots of numbers about jobs created over the first five years of his presidency, and other unrelated legislative achievements, but he never addressed why his economy remained weak and why full-time jobs were in short supply.
The economic recovery “from the punishing 2007-2009 recession remains the slowest since World War II,” says the latest Kiplinger economic outlook report.
Mr. Obama complains that he inherited the deepest recession in generations and that getting out of it was going to take more time.
The severe 1981-82 recession ended in just two years after President Reagan’s tax cuts. His economy was growing by 5.6 percent and 7.7 percent in the last two quarters of his third year, then soared to 8 percent in 1984.
The country had a referendum on Reagan’s economic policies in his fourth year, when he carried 49 states.
The country will pull out of the Obama recession eventually, but it’s not going to happen until we have a president who, like Reagan, believes in the power of American capitalism and understands how it works.
Donald Lambro is a syndicated columnist and contributor to The Washington Times.