O’Bummer?

Polls suggest there are a whole lot of folks out there upset with the president because they feel our economy is a mess. A Bloomberg National Poll taken this past December showed 58% of Americans felt Obama’s economic stewardship was, shall we say, deficient. That was his worst showing since September, 2011, hardly a positive omen for election hopes later this year. A separate poll suggests the blame for all of this has begun to shift squarely onto the president’s shoulders with 49% blaming economic woes on “policies of the present” versus 41% who still hold a grudge against “policies of the past.”

Allow me to stir the pot by asking, “How come?” Estimates by economists at some of America’s leading banks show our economy just wrapped up its best six month period since the recession ended. The Chicago Fed reports it has been growing at or above historic averages for the past several months. Momentum is picking up. Companies in the U.S. created over 180,000 new jobs on a monthly basis last year.

It seems to me that there are two intertwined issues which must be addressed: employment and wages. Despite all the hiring mentioned above, the jobs market has not recovered completely from the recession. Labor Department data shows there are fewer people working today than in 2007. Only 62.8% of working age Americans are in the work force, a low-water mark not seen since early 1978, and this factor has dropped faster over the last six months than it did in the previous twenty-one despite corporate hiring. Adding to the problem, job creation is relegated disproportionately to low-wage areas such as hospitality. Of the 2.2 million jobs created last year, a Westwood Capital report states half offered wages which had not kept pace with inflation. Real median household income remains 8% lower than it was before the recession began. Should we conclude from all this that potential workers are too discouraged by present conditions to even attempt a job search today?

Let’s take the argument a step further. Should President Obama be blamed for all this, or is he just the easiest target? Here at Atlas we have harped consistently on a major demographic shift as being the leading cause for this malaise. A report last year from the Philadelphia branch of the Federal Reserve seems to concur, stating that baby boomer retirements explained the entire drop in labor participation rates since the first quarter of 2012. It concludes , “It is misleading to attribute the decline in the unemployment rate in the last few years to discouragement.”

So there you go. No finger pointing. No political posturing. The problem is really just a natural process that will work itself out in time. Stop fretting. Oh, by the way, the Labor Department just announced 1,350,663 individuals had their extended unemployment benefits terminated on January first. Regardless where we place the blame for our current conditions, it will be hard to wish them a Happy New Year. (by JR)