ARE AMERICANS MORE DEPENDENT ON THE GOVERNMENT?

The Heritage Foundation has a terrific piece on the true state of our unemployment:

Are Americans More Dependent On the Government?
by Amanda Reinecker, March 5, 2010

One of the pernicious consequences of ever-larger government is the increasing dependence of the population on the government for their well-being and livelihood. To drive this point home, experts in The Heritage Foundation's Center for Data Analysis set out to answer the question, "are Americans more dependent on their government?" Their answer: Yes.

Dependency on government has spiked 31 percent since 2001, according to the 2009 Index of Dependence on Government. Heritage experts found that the total Americans dependent on the government for their daily housing, food, and health care is a staggering 60.8 million. (Download the full report in PDF.)

The problem isn't a partisan one. In fact, our experts have identified a steady increase in dependency on government programs for each of the last seven years. The report's authors, including CDA director Bill Beach, clearly note that "the rapid expansion of dependency-creating programs did not begin with Barack Obama's inauguration."

But what sets this year apart from the others, writes Beach, is that "all of the evidence points to even more rapid increases in dependency ahead, which well could threaten democratic government." This is particularly true because America faces the pending mass retirement of the Baby Boom generation, as well as an increase in the number of people who pay no taxes whatsoever.

Since his inauguration, President Obama has worked to expand the size and scope of the federal government, rapidly deepening and expanding the reliance of the American people on federal programs. Perhaps the most prominent example of this is the President's American Recovery and Reinvestment Act — a.k.a. the "stimulus" — which essentially reversed welfare reform and reestablished dependency. The Left's health care "reform" would only make the problem worse.

"Americans should be concerned" about this year's Index, writes Beach. "Dependence on the federal government for life's many challenges strips civil society of its historical and necessary role in providing aid and renewal through the intimate relationships of family, community, and local institutions and governments."

Some fear that America is nearing a tipping point in the relationship between government and the private civic associations that have for so long defined our nation. But Beach believes this year's index score shows, "we've reached that point."

A brighter unemployment forecast? Not yet

According to the latest figures from the Bureau of Labor Statistics, the economy shed another 36,000 jobs in February, leaving the unemployment rate steady at 9.7 percent. According to Senate Majority Leader Harry Reid (D-NV), the fact that "only 36,000 people lost their jobs today … is really good." Now, The Heritage Foundation strongly believes in looking on the bright side of things. But only when there is a bright side.

The President's jobs deficit stands at 8.3 million. What does this mean? Heritage economic policy expert J.D. Foster explains:

Obama promised that if elected he would create 3.5 million jobs by the end of 2010 through new economic policies, beginning with the enactment of a massive economic stimulus package. Accompanying his jobs promise, the President also emphasized accountability and measuring his presidency by results. The result of the President's jobs promise means total employment which in February stood at 129.5 million should be at least 137.8 million by the end of 2010, leaving the Obama jobs deficit at almost 8.3 million jobs.

This deficit, coupled with a forecast for 10 percent unemployment rates over the next two years, illustrates the failure of President Obama's "stimulus" package and underscores the need to explore economic policies that aren't dependent on increased spending and borrowing. (The bill for such policies, of course, is paid ultimately by the taxpayer.) Instead, Washington should truly "jump-start job creation," as the President has stated, by providing businesses with incentives to invest and take risks in pursuit of opportunity.

Individuals and businesses aren't starting new endeavors, investing, hiring new workers, or expanding into new markets because of their economic concerns and fears about intrusive new federal controls.

If lawmakers are really interested in getting the economy back on track, writes Foster, "the first step is to fire Washington's job destruction machine" and adopt pro-growth polices. Then maybe we'd see a brighter turn of events.

CHINA ENDS U.S.'s REIGN AS LARGEST AUTO MARKET

Lately (oh, about the last 12 months), every day brings another sad bit of news, and this one is a clear sign of the times -- something I don't think any of us thought would come. This is another sign of what happens when the government controls, and this government is controlling more and more every day.

This is truly a sad day, as 'China ends America's reign as the largest auto market'. This is our history, part of our American Heritage. Those of us old enough to remember, or who have a knowledge of American history, can appreciate how far we have come -- from the first Model T to the new Cadillac Escalade. America has been a leader in the auto industry, but no longer, since the government has taken control over 2 of the 3 major auto companies.

America sorely needs jobs, and all this administration is doing is sending them overseas. What American in their right mind would want to invest in business expansion, new jobs or new technology in todays shaky economy? How's that Hope & Change working?

A story in Bloomberg News elaborates: (h/t Roger Hedgecock)


China Ends U.S.’s Reign as Largest Auto Market
January 11, 2010

Jan. 11 (Bloomberg) -- China supplanted the U.S. as the world’s largest auto market after its 2009 vehicle sales jumped 46 percent, ending more than a century of American dominance that started with the Model T Ford.

The nation’s sales of passenger cars, buses and trucks rose to 13.6 million, the fastest pace in at least 10 years, according to the China Association of Automobile Manufacturers. In the U.S., sales slumped 21 percent to 10.4 million, the fewest since 1982, according to Autodata Corp.

China’s vehicle sales have surged since 1999 as economic growth averaging more than 9 percent a year has helped automakers including General Motors Co. and Volkswagen AG compensate for slumping demand in the U.S. and Europe. The market will likely remain the world’s largest, even as sales slow this year on a reduction in tax cuts, according to Booz & Co.

“China is becoming the center stage of development for the 21st century global auto industry,” said Bill Russo, a Beijing- based senior adviser at Booz & Co., which advises automakers. “Economic growth has directly translated into growth in automobile sales.”

December sales of passenger cars, trucks and buses rose 92 percent to 1.4 million. For the whole of 2009, passenger-car sales rose 53 percent to 10.3 million.

‘Rising Challenges’

“The incredible growth rate last year is not going to be repeated in 2010,” said Yu Bing, an analyst at Pingan Securities Co. in Shanghai. “Automakers will face rising challenges in China this year with slower demand growth and increasing competition.”

China’s government last year halved the sales tax on new vehicles to 5 percent and offered 5 billion yuan ($732 million) in cash to replace old ones, insulating the country from slumping global demand. The Chinese government announced plans on Dec. 10 to scale back the measures, including raising the tax on new vehicles with engines of 1.6 liters or smaller to 7.5 percent.

Vehicle Ownership

China’s vehicle ownership climbed to 51 million by the end of 2008 from 1 million in 1977. Per capital disposable income for Chinese households increased 46-fold in nominal terms during the period, also making the country the world’s biggest markets for products such as cell phones, beer and microwave ovens.

GM and Volkswagen have targeted growing Chinese demand to compensate for slumping sales in the U.S. and Europe.

GM, the biggest overseas automaker in China, said on Jan. 4 that its Chinese sales rose 67 percent last year to a record 1.83 million vehicles. Shanghai General Motors Co. sold 727,620 cars last year, an increase of 63 percent. GM sold 1 percent stake in Shanghai GM in December to partner SAIC Motor Corp., China’s largest domestic automaker. The $84.5 million deal will leave GM with a 49 percent stake in the venture.

Sales at SAIC-GM-Wuling Automobile Co., China’s largest minivan maker, rose 64 percent to 1.1 million vehicles, accounting for about 60 percent of GM’s China sales. The minivans are sold for as little as $4,000 each.

China Investment

Ford Motor Co. is spending $490 million on a third plant in China, while Volkswagen plans to invest 4 billion euros ($5.7 billion) in the country by 2011. Seoul-based Hyundai intends to build a third Chinese factory as it aims to boost local capacity by 50 percent to 900,000 vehicles a year by 2011.

China had 117 automakers at the end of 2008, according to the automobile association, raising the possibility of overcapacity. Automakers should “keep their heads cool” to prevent expanding production beyond demand, Chen Bin, who oversees regulation of China’s auto industry at the National Development and Reform Commission, said last year.

Henry Ford introduced the Model T in 1908 as the world’s first automobile affordable for a mass market. The car was produced at the Piquette Plant in Detroit, helping the city become synonymous with the auto industry. GM, also based in the city, grew into the world’s largest automaker.

The U.S. has since lost out to Asian carmakers producing cheaper and more fuel-efficient models. Toyota Motor Corp. ended GM’s 77-year reign as the biggest automaker in 2008. General Motors Corp. and Chrysler also both filed for bankruptcy as the worst recession since the Great Depression sapped auto sales.

--Tian Ying. Editor: Patrick Harrington, Neil Denslow

To contact Bloomberg News staff for this story: Tian Ying in Beijing at +86-10-6649-7571 or ytian@bloomberg.net

ARE YOU BETTER OFF NOW THAN YOU WERE *BEFORE* HOPE AND CHANGE?

While straddling the fence, through the late 60s and 70s, it was candidate Ronald Reagan's question "Are you better off than you were four years ago?" that finally gave me the shove, never to return. As a young single mother, struggling to hold on to a newly purchased home for my children with the interest rate topping out at 21-3/4%, I swore never to vote Democrat again -- ever!

It would behoove us to remember those days. Double digit inflation, double digit interest rates, double digit unemployment, increased poverty rates. In other words, stagflation - continuing inflation together with a decline in business activity and an increase in unemployment. Anything sound familiar? We haven't even brought government run health care into the mix yet.

Since you "never want to waste a crisis", the question today can be asked in much less terms -- "Are you better off that you were one year ago?"

Also, keep in mind that all critical 41st Vote, in the upcoming Jan 19th special election in Massachusetts for Republican Scott Brown, and help out all you can here.

An excellent piece in RedState about our current state of affairs:


Are You Better Off Now Than You Were *Before* Hope And Change?
Posted by haystack, January 9, 2010

I’m not, and neither are 3.4 million of my fellow Americans since this President took office. Just ask the 85,000 Americans that sucked it up this Christmas season and went without…for themselves and their families and friends… in the name of President “I will save the world” Obama. If you’re still not convinced, just ask the 661,000 people that just threw up their hands and walked away from the effort altogether last month…yes-I said THOUSAND.

Our only consolation is that we don’t suffer alone-this is, after all, a global President. Ten percent of our Western brethren in Europe share our fate…misery loves company and all that. So much for Barack Obama and the global economy:

“One step forward, 85,000 steps back,” said Michael Feroli, an economist at JPMorgan. About 661,000 people stopped looking for work in the US in December. If they had not done so, the unemployment rate would have gone up to roughly 10.4 per cent.

Analysts said the US economy was still likely to start generating jobs within a few months, but it would take a long time before unemployment began to decline significantly.

The US has now lost 7.2m jobs since the start of the recession, while the eurozone has lost more than 4m, despite extraordinary measures to protect labour markets by the 16 countries that use the euro.

We Americans elected a liberal agenda because it “felt good” and now find ourselves staring at a populace that can’t feed itself or pay its mortgages. We’ve gone numb; our senses dulled by all those wonderful things that Hope and Change™ have actually brought us.

What is Obama’s answer?

Why, the Messiah is offering to spend 5 billion dollars on jobs none of us are actually qualified to apply for. And Congress, not wanting to be outdone, is offering 174 billion MORE dollars from already-empty tax coffers to pay for even more jobs many of us aren’t qualified to apply for. The rest of that money will go to pay for us to remain unemployed:

“The economy is in a rough situation,” Labor Secretary Hilda Solis acknowledged in an interview with The Associated Press. She said she thinks companies are reluctant to ramp up hiring because they’re waiting to see what new stimulative steps the government might take to provide relief.

On Friday afternoon, President Barack Obama plans to announce more government spending to create green jobs. The White House says Obama will unveil projects that will help develop solar and wind power and energy management technologies. The funding is part of the $787 billion economic stimulus package Congress approved last year.

Obama is also expected to reiterate the administration’s call for an additional $5 billion in spending for clean energy manufacturing. Congress would have to appropriate the additional money.

Congress, meanwhile, is considering a “jobs bill” that would spend $174 billion on unemployment benefits, roads and other infrastructure and provide support for cash-strapped state governments. The House approved the legislation on a party-line in late December. The Senate is expected to take up the measure this month or next.

Even as Obama says the latest round of job losses is a ‘wake up call’ I get the strange feeling he, and the Democrat majority in Congress, are asleep at the wheel (emphasis mine):

“Our progress has been unmistakable,” Obama said as the new year began. “We’ve disrupted terrorist financing, cutting off recruiting chains, inflicted major losses on al-Qaida’s leadership, thwarted plots here in the United States and saved countless American lives.”

Yet every time Obama tries to offer a dose of perspective like that, he faces the reality that people live in the moment.

On terrorism, Americans are less concerned about quiet successes than troubling failures, especially one that evoked harrowing memories of Sept. 11, 2001.

On the economy, people prefer good news now, not updates on how things are gradually getting less bad.

The way Obama sees it, the problems he took on — recession, war, health care, a warming planet — were always too huge and complicated to fix that fast.

This President and his agenda have failed us. He is clearly out of touch with the people he thinks he is saving from themselves. Rather than focusing on a piece of legislation very few of us want, Barack Obama should be focusing on creating jobs. He can do that in a few very simple ways, not the least of which is to get Government OUT of our way rather than right square in our faces at every turn on the road to economic recovery.

He could be giving businesses reason to believe there are tax breaks and pro-US incentives out there to start manufacturing again. He could, along with Congress, extend tax cuts to small business and middle class wage earners. He could pull back regulations that are impeding business expansion rather than deepening them. He could let go of this EPA takeover of the global warming crisis that isn’t, even if only for 12 or 24 months, so that local economies aren’t forced to commit economic suicide in the name of stopping climate change:

In an effort to improve air quality, the U.S. Environmental Protection Agency laid out stricter smog standards Thursday, putting the Austin area and other parts of Central Texas in jeopardy of violating clean air rules.

If the Austin area can’t meet the new standard, as seems likely, it could face federal penalties that hamper business growth and delay transportation projects.

As officials try to clean up the air, drivers in Central Texas could face lowered speed limits, and gas stations could be forced to sell reformulated gasoline — which leads to fewer emissions but gets 1 to 3 percent fewer miles per gallon. Annual vehicle emissions testing, now required for auto owners in Travis and Williamson counties, could spread to Hays and Bastrop.

For all his efforts to prove that Government is the answer to all our troubles, President Obama is only further proving to us that Government is the cause of them. A recovered economy begins with a busy workforce…not one being paid to sit it out in the comfort of their unheated and foreclosed homes.

THE DEFINITION OF ECONOMIC INSANITY

Back in January 2008, America was sitting comfortably with an unemployment rate in the fours. But Speaker Nancy Pelosi pushed through the first Stimulus bill, injecting coverage for Fannie-Mae and Freddie-Mac. We have been in a free fall since then, losing over 3 million jobs and nearly doubling unemployment within a year.

Enter Obama, with another Stimulus, making the first look like chump change, and doubling the loss of jobs in 10 months. Does this look like tax and spend works? We have lost over 7 million jobs in less than 2 years, with the threat of another Stimulus on the horizon (euphemistically camouflaged so the fools don't see we're doing it again, wink-wink).

The Heritage Foundation writes further on the "jobs" situation:


The Definition of Economic Insanity
December 4, 2009

In January 2008, the United States economy employed 138.1 million people and the unemployment rate stood at 4.9%. But the powers in Washington thought deficit spending could boost a slowing economy, so Speaker Nancy Pelosi (D-CA) passed and President George Bush signed a $168 billion economic stimulus bill made up of temporary tax cuts and increased mortgage grantees for Fannie Mae and Freddie Mac. By January 2009 that economic stimulus worked so well that the U.S. economy had lost 3.5 million jobs and the unemployment rate stood at 7.6%. Again the powers in Washington thought deficit spending was the answer, so Speaker Nancy Pelosi and newly minted President Barack Obama dialed up $787 billion in temporary tax cuts and permanent spending increases. Ten months later, the U.S. economy has now shed another 3.59 million jobs and the unemployment rate stand at 10%.

Undeterred by the complete failure of their past job creation efforts, leading leftist luminaries are again calling on the liberal majorities in Congress and President Obama to approve billions more in government spending for a third stimulus. Yesterday, President Obama hosted a “jobs summit” where academics, union leaders, and select big business leaders made their pitch for government largess. Among the ideas reported: Teamsters leader James Hoffa called for higher barriers to trade, President Obama insisted that all future aid to states go to preserving government jobs and not tax cuts, and others pushed to bring the “success” of Cash for Clunkers to a new Cash for Caulkers program.

These “new” ideas will fail for the same reason the past two government stimulus plans failed: governments do not create jobs. Only the private sector in pursuit of opportunity can create jobs on net. The best we can hope from government is that it keeps to a minimum the jobs it prevents and the income and wealth it destroys. President Obama does not understand this. At yesterday’s summit, Obama lamented the lack of job creation: “There’s a lot of money on the sidelines in the private sector. They are still nervous about whether they want to go ahead and take the risks that are inherent in a free market system.”

Wrong. Businesses aren’t nervous about “the risks that are inherent in a free market system,” they are nervous about the risks inherent in a government regulation dominated economy. Fred P. Lampropoulos, founder and chief of Merit Medical Systems Inc., told the President that businesses were uncertain about investment because “there’s such an aggressive legislative agenda that businesspeople don’t really know what they ought to do.” That uncertainty, he added, “is really what’s holding back the jobs.”

THE IMPENDING OBAMA BORROW AND SPEND DISASTER

Now Obama decides to address deficit spending. Now he decides to address unemployment with another 'summit'. The last 10 months have clearly displayed how good Obama is at keeping his word, and these recent displays of concern are no different.

This borrow and spend is no way to run a household, much less a country, especially when you are stealing other people's hard earned money. Look at what he just gave Sen. Mary Landreiu of Louisiana to bribe her healthcare vote. Redistribution of wealth is nothing more than highway robbery, and against the 8th Commandment.

If we stay informed, we can beat back these 60s radicals, but it will take every bit of energy we can muster. The Heritage Foundation has an excellent piece on this:


The Impending Obama Borrow and Spend Disaster
November 23, 2009

Speaking at Georgetown University on April 14th, President Barack Obama promised: “We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock. We must lay a new foundation for growth and prosperity — a foundation that will move us from an era of borrow and spend to one where we save and invest.” Nice words. But the Obama administration actions have produced all sand and no rock. From the Wall Street Bailout, to Cash for Clunkers, to Obama’s failed stimulus, this administration has been all about borrowing and spending. And as the New York Times reports today, it will not be long before we begin paying a real price for these policies:

With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.

In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.

$700 billion a year in interest payments alone. That is more money than our entire defense budget for next year including the wars in both Iraq and Afghanistan. And that is a low end estimate. As Heritage fellow J.D. Foster has previously noted, governments around the world are also furiously borrowing, feeding a global debt bubble that will eventually force the U.S. Treasury to pay much higher interest rates. And much of the debt we took on this past year is coming due soon. The NYT reports that to take advantage of low rates today, the Treasury issued a huge amount of short-term debt. Treasury officials estimate that about 36 percent of the government’s marketable debt — about $1.6 trillion — is coming due in the months ahead. The Concord Coalition’s Robert Bixby comments: “The government is on teaser rates. We’re taking out a huge mortgage right now, but we won’t feel the pain until later.”

The American people are rightly concerned about this impending disaster. According to Rasmussen Reports, deficit reduction has remained the number one issue for voters ever since President Obama listed his four top budget priorities in a speech to Congress in February. Forty-two percent (42%) say cutting the deficit in half by the end of the president’s first term is most important, while only 24% say health care reform should be the top priority. Despite the clear wishes of the American people, the Senate voted Saturday night to move forward on a $4.9 trillion in new health care spending. The leftist majorities in Congress say that they will follow with the promised spending cuts and tax hikes to make their bill deficit neutral, but nobody believes them. According to the latest Quinnipiac University poll only 19% of Americans believe President Obama’s promise that health insurance reform will not add to our federal budget deficit over the next decade. 72% of Americans tell Quinnipiac they right understand that Obamacare will only add to our nation’s record breaking $12 trillion national debt.

There are a number of highly credible conservative plans for reducing our national debt. But Congress should take a tip from the medical profession on health reform and “first do no harm.”

QUICK HITS

According to the Associated Press, rising unemployment taxes are killing small business job creation.

Unemployment rose in 29 U.S. states last month including Michigan’s nationwide highest 15.1%.

President Obama supporter and MSNBC host Chris Matthews said Obama is making ‘Carteresque’ mistakes.

10% UNEMPLOYMENT SHOWS OBJECTIVE FAILURE OF OBAMA STIMULUS

It is pure folly to claim 640,329 have been created or saved by the overbloated Stimulus bill, much less "saved us from the brink". It's pure fuzzy math, and sounds 'fishy'. This administration also claims we are in a 'jobless' recovery. You can't have a recovery without recovering jobs. Sheesh.

The Heritage Foundation writes:


10% Unemployment Shows Objective Failure of Obama Stimulus
November 6, 2009

Last week the Obama administration issued a report purporting to show that the President’s $787 billion economic stimulus plan had saved or created exactly 640,329 jobs. Such a precise number for such a fuzzy concept as jobs “saved or created” immediately raised doubts about the veracity of the report in any honest American’s mind.

And since that report was issued, a once compliant press has filed story after story tearing the credibility of the Obama administration’s job creation claims to shreds. Just enter the words “stimulus”, “jobs”, and “report” in a Google News search and these are just some of the headlines you will receive:

• Stimulus Job Report Filled With Errors
• Stimulus Watch: Salary raises counted as saved jobs
• White House Tally Appears to Overstate Stimulus Jobs
• Reports Show Conflicting Number of Jobs Attributed to Stimulus Money
• Stimulus Watchdog: job counters confused, need guidance
• Why stimulus jobs aren’t here to stay
• Many California jobs ’saved’ by stimulus funds weren’t in jeopardy

Luckily the American people do not need to count on phony new jobs studies to provide the objective data necessary to hold President Barack Obama accountable for his economic policies. The Bureau of Labor and Statistics has been collecting accepted and standardized data employment data since the 1940s. When President Obama was selling his $787 billion stimulus to the American people he promised unemployment would never rise above 7.8% and that by 2010 the U.S. economy would employ 138.6 million jobs.

Today, BLS released its monthly jobs report and the numbers speak for themselves. The economy shed another 190,000 jobs in October, bringing the number of jobs lost since Obama was sworn in to 3.8 million. Worse still, the unemployment rate rose from 9.8% to 10.2% percent. With only 130.8 million jobs in the U.S. economy, President Obama is now 7.8 million jobs short of what he promised the American people. That makes President Obama’s stimulus an objective failure.

The Obama stimulus failed because it was based on faulty Keynesian beliefs. Heritage fellow J.D. Foster explains:

The Keynesian stimulus theory fails for the simple reason that it is only half a theory. It correctly describes how deficit spending can raise the level of demand in part of the economy, and ignores how government borrowing to finance deficit spending automatically reduces demand elsewhere.

Fortunately, the economy’s natural recuperative powers may be ending the recession. Last week the Commerce Department reported that the economy grew at 3.5%. But if this recovery is going to include job growth along with GDP growth, then job killing initiatives like Obamacare and cap and trade will have to be abandoned.

QUICK HITS

Speaker Nancy Pelosi (D-CA) has confirmed she will break her pledge to put the final language of the health care legislation online for 72 hours before a vote.

Boxer’s Procedural Gambit Pushed Bill Out of Committee

UNEMPLOYMENT STILL HIGH BY GOV'T DESIGN

"Are you better off today than you were a year ago?" Ronald Reagan

We all know the unemployment number is more realistically around 18% when you factor in the people who have past the limit, people who have had their hours cut back, and people who have been put on part-time.

Erick Erickson, editor of RedState, writes:


Unemployment Still High By Gov't Design
by Erick Erickson, November 6, 2009

• Unemployment at 10.2%

• President's top economic advisor admits this is by government design.

• White House intends for unemployment to go down in an election year.

Unemployment this morning topped 10.2%, even though the number seeking employment has declined. Many have just given up. Likewise, and more troublesome, the average hours worked in a week is at its lowest in decades - 33 hours. That suggests employers are going to just expand hours worked in the future, instead of hiring new people. So the unemployment number will stay high for a while.

On January 18, 2009, Obama's top economics advisor Larry Summers said Barack Obama's stimulus plan would keep unemployment below 10% and could be deemed to have failed if it crossed 10%.

On July 17, 2009, Larry Summers said:

"Both administration and independent forecasts predicted that only a very small part of the total job creation expected from the Recovery Act would take place within six months," he continued. "Indeed, a Council of Economic Advisers' study predicted that only 10 percent of the total job impact of the Recovery Act would take place during calendar year 2009. Given lags in spending and hiring, the peak impact of the stimulus on jobs was expected not to be achieved until the end of 2010."

In other words, an ever growing number of Americans have to sit on the unemployment line until next year by government design. Why? So in 2010, Barack Obama and the Democrats can run on falling unemployment numbers. They'd rather you starve now so they can have recovery happen in an election year.

We're all political pawns to Barack Obama.

One more thing: remember, outside economists say passing the Democrats' health care plan will slow the recovery further, stagnate wages, and increase unemployment. Do we want to do that?

Sincerely yours,

Erick Erickson

Are We "Pointed In the Right Direction" Yet?

Obama's claim that "We have rescued our economy from catastrophe" is nothing more than laughable, and predictable. Keith Hennessey explains the faux self-praising:


Are We Pointed In the Right Direction Yet?
Keith Hennessey, August 10, 2009

Here is President Obama in the Rose Garden last Friday:

"Today we're pointed in the right direction. We're losing jobs at less than half the rate we were when I took office."

There is a difference between "good news" and "pointed in the right direction." Friday's jobs report was good news, but the economy is still not yet pointed in the right direction. We have a ways to go.

Beginning with his weekly address on September 1st the President has been saying that the economy is "pointed in the right direction" or "headed in the right direction." He said this first after the 2nd quarter GDP report showed a 1.1% decline, and again after last Friday's jobs report showed the U.S. economy lost 247,000 jobs in July. The President is making a common error by looking at the rate of change of a rate of change.

Here is the graph that shows why the President's language sounds plausible. The vertical axis shows the net change in how many people were working from the previous month. (Click on any graph to see a larger version.)

The yellow oval shows why the President is saying "we're pointed in the right direction." Aside from the sharp one month drop in June, this graph is headed up from its low point in January 2009. You can see from this graph that for the first two-thirds of 2008, the economy was losing about 150,000 jobs each month. The bottom then dropped out, and we lost 741,000 jobs in January 2009. In July the economy lost 247,000 jobs. Things are getting better, right?

Wrong. Things are still getting worse, but less slowly. The mistake is looking at the direction of a trend on a graph of a rate of change. When you're looking at a graph that displays a rate of change, "things are getting better" if the latest point is above the horizontal axis, and things are still getting worse as long as you're below zero. The economy is still losing jobs, and so we are not yet "pointed in the right direction."

It's easiest if I show you a different graph. Looking at the same timeframe, let's graph levels of employment - how many people are working at any point in time.

You can see from this graph that employment peaked in December 2007 and has been steadily declining since. The employment levels turns downward when the rate of change crosses into negative territory, in January 2008.

If you look closely at the yellow circle, you can see that the very last part of the green line is tilted slightly less downward than the part before it. That's the good news everyone began celebrating last Friday. Employment dropped by 443,000 from May to June, and by "only" 247,000 from June to July. This smaller decline shows up as a change in the downward slope of this line. But the line is still going down. Things are not getting better until that line turns up.

Imagine you're in a car that has been rolling backwards downhill at high speed. Now the car slows down, but it's still rolling backwards downhill, just more slowly. You are not headed in the right direction until you're moving forward.

People in Washington try to show they're sophisticated by focusing on the first graph, "Employment is still declining, but less rapidly. That's good, right?" Yes, and there is an important distinction between "good news" and "headed/pointed in the right direction."

Financial markets care about expectations and rates of change. What will the future look like relative to today? Does the new data make my predictions of the future look better? Markets (and economists) focus on the first graph.

People working in the real economy care about present levels. Do I have a job today? How big is my paycheck? This is better captured by the second graph.
If you focus on the former, Friday's jobs report was good news. The 247,000 jobs lost in July was fewer than expected, and it raised people's expectations about the future path of the economy.

From an employment standpoint, the economy will be headed in the right direction when the number of people employed is increasing - when the second graph turns upward, or when the first graph crosses into positive territory. A minimum break-even threshold is about +100K jobs per month - that's roughly the number of jobs needed to keep up with population growth and keep the unemployment constant.

Even when that green line turns upward and we are in fact "pointed in the right direction," we will still be down at least 6.6 million jobs from the high point in December 2007. We will then have a long way to go, and will need incredibly strong job growth to work our way back up to where we were. When the President says "We won't rest until every American that is looking for work can find a job," he is setting for himself a goal of roughly 7 million more Americans being employed than today.

Do the words matter? They do when they come from the President and when they are about such an important topic.

Friday's jobs report was good news because the bad news beat expectations, and because it signaled that things might turn around more quickly in the future. But the President is wrong - the U.S. economy is not yet pointed in the right direction.