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The Obama Jobs Summit: Grate Expectations

November 14, 2009 4 comments

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Governor William J. Le Petomane: We have to protect our phoney baloney jobs here, gentlemen! We must do something about this immediately! Immediately! Immediately! Harrumph! Harrumph! Harrumph!

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Hedley Lamarr: Gentlemen, please rest your sphincters.

Mystery solved: We wondered about the sudden conversion of Saint Paul to the church of shorter working time, and the Messiah provided the clue.

From the Christian Science Monitor:

President Obama will host a jobs summit in December to consider strategies for shrinking ranks of the unemployed.

The president said Thursday he will invite CEOs, small-business owners, economists, and labor unions to take part in the summit. It’s a recognition that, though the economy appears to be growing again, the recession won’t really be over for Americans until the unemployment rate, currently at a generational high of 10.2 percent, retreats.

It appears the bushes have been beat for some ideas, any ideas, to address the problem of jobs in an economy that has seen productivity jump at an almost 10 percent annual rate in the most recent economic report. Washington wants you to believe that the Great Recession is over, but that productivity number is a huge red flashing light that employment is no where near its nadir.

With Washington announcing yet another extension of unemployment benefits, and long term unemployment – those without jobs twenty-six weeks or longer – producing new records every Friday – all of this occurring against the backdrop of an enormous and open ended deficit – they are running out of ideas to stem the flood of newly unemployed.

But it only get worse: In January or February next year, Washington will be forced to add another 750,000 more unemployed to the astounding number already officially counted. These are only the as yet uncounted jobs lost in the early months of this recession. Expect further revisions in July 2010.

Not looking too hopeful for the Democrats in 2010, you say?

Yeah, like that, only uglier.

The Wall Street Journal had some fairly dismal news for the Messiah on that front – not only is 2010 looking nasty, but 2012 is looking downright cataclysmic. Even if job losses end right now and begin to return at a normal rate, we are looking at 2016 before unemployment falls to pre-recession levels.

The worst recession since the Great Depression has left a scorched landscape that will weigh on the labor market and the broader economy for years to come, according to economists in the latest Wall Street Journal forecasting survey.

The 48 surveyed economists expect the economy to bounce back from four quarters of contraction with 3.1% growth in gross domestic product at a seasonally adjusted annual rate in the just-ended third quarter.

Expansion is seen continuing through the first half of 2010, though at a slower rate. But the massive downturn means the labor market will take years to heal. On average, the economists don’t expect unemployment to fall below 6% until 2013; unemployment hit 9.8% in September.

“Never before has business shed so many workers so fast, so many people failed to find work who are looking for work, and so many dropped out of the labor force as in the current circumstance,” said Allen Sinai at Decision Economics.

The Journal thoughtfully included this nice piece of chart porn to emphasize the point:

WSJ - Jobsrebound

Wall Street Journal - Even your kids will be jobless

Mish Shedlock, never to be outdone by the staid Journal, sees the Journal’s 2016, and raises it 2020:

Somewhere along the line I called for unemployment to peak at about 11.5% so for the sake of this analysis let’s keep that approximate target in mind as one distinct possibility. Let’s also assume that unemployment will peak in December 2011 about 2 years from now. This is what scenario number one looks like

mish jobs scenario 1

Mish Shedlock: Uh, we mean your grandkids...

It was the Wall Street Journal’s sudden pessimism on the issue of jobs which got our Spider Sense tingling: Since when does the WSJ have any concern for the well-being of working families. And, Mish Shedlock, hardly a defender of the working stiff – a guy for whom the union wage is the economic equivalent of the Soviet Gulag – is not exactly advocating another round of stimulus here.

And, then it hit us:

Washington is managing your expectations on the level of unemployment for the next decade

What the above pessimistic examples of chart porn suggests to us is that you are going to have your expectations about what is a normal level of unemployment reset by Washington, under the guise of a jobs summit!

By the end of it, you will expect jobs to be scarce for a decade or longer; you will expect European levels of unemployment to be normal; and you will expect it to take a long long time for this situation to change – if it ever changes.

After that, the extensions of unemployment compensation will quietly come to an end in the interest of setting a glide path toward a sustainable deficit.

grateexpectations

Your future: Grate Expectations

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