Few people would argue that the economy has "fully recovered" from the free fall we saw in late 2008. Unemployment remains at 9.6%, and while this number will likely dip over the next two months as seasonal holiday jobs put some people momentarily back to work, the reality is some full time jobs simply aren't ever coming back.
It's not totally fair to dump the blame for all of this on a president who inherited an unemployment rate of 7.6%, but it's also hard to defend his record on job creation. Yes, much of what President Obama did legislatively stopped the bleeding and prevented these unemployment numbers from being far worse. But little of that matters when people are hurting, as is evidenced by the "shellacking" the Democrats took in November's midterm elections.
A recent Federal Reserve forecast on the unemployment rate doesn't make it seem like things will get dramatically better anytime soon:The Federal Reserve issued a dour new economic outlook ... predicting that the unemployment rate, currently at 9.6%, will fall to only 9% by 2011 and 8% by late 2012. That's bad news for everyone, but especially for President Obama; Daily Intel notes that incumbents lost in four of the past five presidential elections in which unemployment was at more than 6%.
The odd thing about these jobless numbers is how out of sync they are with the numbers on Wall Street. The Dow's been well over 11,000 for several weeks now. The GDP rose at a much better than expected 2.5% annual rate this summer. Incomes and consumer spending rose while the number of people applying for unemployment benefits fell to a two-year low last month. And wouldn't you know it, some of the very same corporate fat cats who caused 2008's collapse are getting ready to enjoy some very nice Christmas bonuses. But will that mean more jobs? Take note:
Recession or no, US corporate profits hit an all-time high of $1.66 trillion in the last quarter, reports the New York Times. It's the highest figure since the government began tracking the stat more than 60 years ago, though it trails the record set in the third quarter of 2006 when adjusted for inflation, notes the Washington Post. Either way, all this profit means companies will be busting to hire people, right? Not so much.
One of the reasons profits are up is because companies have increased productivity, following the old "do more with less" mantra, explains the Times. In addition, many US companies are doing brisk business in India and China, where demand is booming in certain sectors. Booming corporate profits add to overall growth, but that remains at a mere 2.5%-"not fast enough to reduce significantly the unemployment rate or to prevent a slide into deflation," says one economist. (Newser)
If you read between the lines here, it seems like lots of corporations trimmed their payrolls when things were bad, but are now intent on simply asking existing employees to do double-time so they can rake in record profits without having to expand their headcounts. I suppose this is smart business. Current employees are asked to do more than ever, knowing they can't just quit and go find a job elsewhere. Shareholders are happy. Everyone (sorta) wins. Well, except for the people sitting on sidelines, applying for jobs they've got no mathematical chance of getting. Not when there are five unemployed workers per every available job. Good luck with that.
Call me nuts, but this sorta seems like a lose-lose situation for the President. He can pass all sorts of tax incentives for new hires, but if corporations are intent on simply doing more with less, there's no way the unemployment numbers are going to significantly change for the better anytime soon. And if the president can't get the unemployment rate down below 8% as predicted, Obama might end up as a one-term president.
What, if anything, can the Obama Administration do to encourage these companies to convert their record profits into new hires?
Jay Anderson is a freelance writer from Washington, DC, whose work has been featured in the Washington Post and on NPR. When he's not busy talking smack here, he runs the award-winning blog AverageBro.com. Follow him via Twitter @AverageBro.