January 30, 2013
Employer-provided birth control. Binders full of women. Mitt Romney’s tax returns. All of the issues that had attracted so much attention in 2012 belied the fact that the US economy had been stagnating ever since the recovery technically began in June 2009. From that point forward, the workforce declined and jobs failed to materialize in large enough numbers to keep pace with population growth.
The disconnect between politics and reality reached its apex in the President’s inaugural speech, which mentioned the word “economy” once, and jobs only twice. The press lauded it as a progressive masterpiece, hailing “collective action” as the solution to the nation’s ills. Barack Obama talked about renewable energy, climate change, and gay rights, but somehow skipped over the entire issue of job creation and economic expansion.
On Wednesday, the economy took over center stage again. While Washington opened a long-delayed debate on immigration reform and the Department of Defense started another on women in combat, the Bureau of Economic Analysis dropped a bombshell on the media in its advance report of economic growth in the fourth quarter of 2012. The American economy contracted for the first time in nearly four years, with a GDP growth rate of -0.1 percent.
The New York Times called this report “unexpected.” The Associated Press wrote that it was “stunning.” In comparison to analysts’ expectations, that’s certainly correct. The consensus had been that GDP growth would come in around 1 percent, dropping from Q3’s 3.1 percent on the basis of slower government spending and declines in export sales.
But why should anyone else other than analysts have been surprised? The Obama administration hasn’t focused on job growth since the 2009 stimulus package, which failed at even maintaining the workforce participation levels of June 2009 when the economy stopped contracting after the Great Recession. At that time, the civilian population participation rate in the workforce – the relative measure of how many adults either have jobs or are actively seeking one – was 65.7 percent, the same as when Obama gave his first inaugural address. It’s presently at 63.6 percent, just a tenth of a point up from the 31-year low hit in August 2012. As jobs decrease, so does economic dynamism, and potential growth.
For those who have jobs, the increased joblessness has increased family obligations significantly. On the same day that the BEA announced the contraction in Q4, Pew released a new survey showing that middle-aged households are increasingly providing financial support for unemployed or underemployed adult children. In 2005, 42 percent of middle-aged adults between 40 and 59 years of age provided primary or supplemental support for adult children. In 2012, that number grew to 48 percent, with most of the growth in primary support, going from 20 percent to 27 percent.
Small wonder that many Americans still consider jobs and the economy to be their biggest concerns. Two recent polls underscore that conclusion. Gallup conducted its regular polling on issues a few weeks after the tragic Newtown shooting to discover that only 4 percent of Americans considered gun violence the most important issue. More than five times as many (21 percent) chose “the economy in general,” while four times (16 percent) as many specified “unemployment.” A new poll from Reason this week produced similar results, with 29 percent preferring that Obama focus on the economy, and another 19 percent wanting jobs to be his first priority. Only 3 percent in this poll thought Obama should have guns as his highest priority.
It’s not just conservatives that have noticed a lack of focus on job growth, either. Mother Jones lamented the lack of action from Obama and his Jobs Council. That panel of advisers was created in the aftermath of the 2010 midterm elections after the President got punished for a lack of focus on the stagnating economy and prolonged joblessness. The council’s mandate expires today, and as MJ reports, it’s clear that it was never intended to seriously focus on its purported mission:
“The council hasn’t met in over a year (its last meeting was January 17, 2012) and has only met four times since it was created. Last summer, the White House said that the council had not convened in the past several months because the president had “a lot on his plate.” The panel has put out a total of three policy recommendation reports, but that hasn’t translated into much actual movement on jobs.”
“A lot on his plate?” Like what, exactly? Oh, right – demanding that employers provide free birth control to employees, binders full of women, and Mitt Romney’s tax returns.
The inevitable result of this neglect was made apparent in the BEA report on Wednesday. Year-on-year growth in all of 2012 was just 2.2 percent, barely over 2011’s 1.8 percent, both of which are stagnation numbers. The 2012 GDP growth rate of 2.2 percent was just a little over half of the White House’s 2011 projection of 4.0 percent, on which they based their budget deficit projections. In the previous three years, we have only seen two quarters with a growth rate of over 2.6 percent.
And yet, the White House and its supporters still don’t seem to comprehend what these numbers indicate. The Democratic Party’s communications director Brad Woodhouse quoted an economist to call the result “the best-looking contraction in US GDP you’ll ever see.” Jay Carney tried blaming the contraction on Republicans and the threat of the sequester, dredging up the “corporate jet-owners” slam.
John Boehner immediately retorted by reminding Carney that the idea for the sequester came from the White House, not the GOP. Moreover, the White House has nothing on its schedule to work with Congress on eliminating the sequesters, as The Hill reports, which makes this a very thin reed to grasp – and an indication that by even their own standards, the Obama administration is still asleep at the wheel on the economy.
The Q4 GDP report should be a wake-up call. To paraphrase James Carville’s famous 1992 mantra, it’s still the economy – and this administration still hasn’t focused on it at all.