“With The Recovery Entering Its Fifth Year…”

by William Teach | August 2, 2013 10:04 am

We certainly should recall that[1] “it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.”

[2]

(Bloomberg[3]) Employers added fewer workers than anticipated in July even as the U.S. jobless rate dropped to 7.4 percent, indicating uneven progress in the labor market.

The 162,000 increase in payrolls last month was the smallest in four months and followed a revised 188,000 rise in June that was less than initially estimated, Labor Department figures showed today in Washington. The median forecast of 93 economists surveyed by Bloomberg called for a 185,000 gain. Workers spent fewer hours on the job and hourly earnings fell for the first time since October. …

So, why did the jobless rate drop? Good question

The labor participation rate dropped to 63.4 percent from 63.5 percent.

So, even more people dropping out of the jobs market in despair.

(White House[4]) With the recovery entering its fifth year, we need to build on the progress we have made so far and now is not the time for Washington to impose self-inflicted wounds.

The only progress has been the ever diminishing labor participation rate and the increasing number of people in low wage part time positions.

The across-the-board budget cuts known as the sequester continue to be a drag on the economy now and in the future. The Administration continues to urge Congress to replace the sequester with balanced deficit reduction, and promote the investments our economy needs to put more Americans back to work, such as by rebuilding our roads and bridges.

And excuse in a storm, eh? It’s always something with this crowd, except for the notion that Mr. Obama’s policies have been a disaster. And, as Erika Johnson[5] points out, hourly earnings and the length of the time worked decreased. The first step in fixing a problem is admitting you have a problem. The second step is diagnosing what the root problem(s) is. So, 5 years into the recovery the economy stagnates along. Let’s not forget that the 2nd quarter GDP was an anemic 1.7%, following a 1st quarter GDP of 1%.

This all seems to be a repeat of the Big Government policies of FDR

The slow economic recovery made possible by New Deal programs suffers a setback as unemployment rises. FDR’s detractors call it the start of the “Roosevelt recession.”

That was March, 1937[6], 5 years after Roosevelt was first elected. Then Congress gave him more money to spend, and unemployment stayed high. It wasn’t until WWII rolled around that things started to change. Let’s home we don’t need the same thing.