Free Markets, Free People
OK, look, I’m done with the election. It’s over. Romney lost. Time to move on.
Most of us who follow politics understand the reasons and have a pretty good idea of why he’s going home and the Obama’s are staying in the White House. Short version: They let the left define the election issues. It was a masterful job of distraction aided and abetted by a complicit media (hey, “60 Minutes”, you have NO credibility anymore). Period.
Guess what those issues weren’t? The winning issues: Jobs. Economy. Debt. Deficit. ObamaCare. Benghazi. Fast and Furious.
Lesson: Don’t let your opposition define the issues. A lesson as old as politics. Romney’s campaign blew it. It allowed the left to make it about “lady parts”, abortion, contraception, Bain Capital, class warfare and racism. They made being successful something of which to be ashamed. And, of course, a couple of idiot GOP candidates at state level who came off like jackasses talking about “legitimate rape”, etc. who made it even worse (because the complicit media made their stupidity national stories — unlike jobs, the economy, debt, ObamaCare, Benghazi and Fast and Furious.).
And that scared the usual suspects enough to turn out and vote (ye olde and reliable low information voters in swing states who scare easily) and dampened GOP turnout (didn’t even get the number out that McCain got for heaven sake).
That’s the election in a nutshell.
So, now we put that behind us and deal with the inevitable aftermath.
Let this paragraph, given the economic circumstances we now find ourselves in and the policies we’ve suffered under with this administration in reference to fossil fuels, sink in:
U.S. energy supplies have been transformed in less than a decade, driven by advances in technology, and the economic implications are only beginning to be understood. U.S. natural gas production will expand to a record this year and oil output swelled in July to its highest point since 1999. Citigroup estimated in a March report that a “reindustrialization” of America could add as many as 3.6 million jobs by 2020 and increase the gross domestic product by as much as 3 percent.
In case you missed those numbers, that’s plus 3.6 million jobs and kicking up the GDP by as much as 3% by 2020.
And imagine the tax revenues that would bring as well.
Low cost fossil fuel will also do much, much more:
[T]here are signs the economic gains have begun to expand beyond the oil and gas fields and that the promise of abundant, low-cost fuels will give a competitive edge to industries from steel, aluminum and automobiles to fertilizers and chemicals.
In other words, low cost fuels will make our manufacturing sector more competitive which means more of it and more jobs as well. Right now (and for the foreseeable future) our natural gas is much less expensive than that in the UK and Europe. And we have literally trillions of cubic feet of it that is recoverable.
That’s starting to drive some massive private investment:
Companies plan to invest $138 billion in more than 700 natural gas storage, pipeline and processing plants in the U.S., and another $88 billion in more than 500 gas-fired power generation units, according to Joseph Govreau, vice president and editor-in-chief of Industrial Info Resources. The
firm tracks projects from planning stages through construction.
That’s only a portion of what this will spur, if allowed to go ahead. Fertilizer production, petrochemicals, etc., all could see a revival with cheap fossil fuel.
Democrats keeps saying that reviving the manufacturing sector should be a priority.
So here’s a valid means of doing so.
Yet for 3 plus years, this administration has done everything it can to slow walk or block increased production and exploration on federal lands and off our coasts. There’s no sign it plans on changing that.
This boom we’re talking about has taken place in a relatively very few areas, mostly privately owned:
So far, the economic benefits have been confined to states such as Louisiana, Texas and North Dakota, while the national jobless rate has stayed above 8 percent for 42 straight months in the wake of the worst recession in seven decades.
Seems like the proverbial “no brainer” doesn’t it? Open up federal lands and let oil companies responsibly and in an environmentally safe way explore for and exploit the natural resources we have and the country is put in the position to reap the benefits:
“This is one of those rare opportunities that every country looks for and few ever get,” said Philip Verleger, a former director of the office of energy policy at the U.S. Treasury Department and founder of PKVerleger LLC, a consulting firm in Carbondale, Colorado. “This abundance of energy gives us an opportunity to rebuild our economy.”
Or we can repeat these past 3 plus years.
When I first heard this I thought, “I want what he’s smoking”. Because you have to be high on something and totally unaware of reality to make a statement like that.
So, I thought, it has probably been taken out of context or shortened or something, because even understanding that it is being attributed to Obama, no one would be that out of touch.
Giving him the benefit of the doubt I waited until I could get a transcript of the whole exchange.
Boy was I wrong. Not only can someone be that out of touch, it was indeed Obama:
Question: What about the Republicans saying that you’re blaming the Europeans for the failures of your own policies?
President Obama: The truth of the matter is that, as I said, we created 4.3 million jobs over the last 27 months, over 800,000 just this year alone.
The private sector is doing fine. Where we’re seeing weaknesses in our economy have to do with state and local government. Oftentimes cuts initiated by, you know, Governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don’t have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.
And so, you know, if Republicans want to be helpful, if they really want to move forward and put people back to work, what they should be thinking about is how do we help state and local governments and how do we help the construction industry? Because the recipes that they’re promoting are basically the kinds of policies that would add weakness to the — to the economy, would result in further layoffs, would not provide relief in the housing market, and would result, I think most economists estimate, in lower growth and fewer jobs, not more.
If you’ve ever wondered what word salad looks like, feast your eyes.
The way back to prosperity is creating jobs in the government sector? More spending? I’m sorry, that’s just ignorant. The whole answer is incoherent. Don’t they know better than to let him loose without his teleprompter?
Nick Gillespie is as stunned as anyone else:
The stammering, halting, tentative delivery of Obama strikes me as symptomatic of a whiskey priest who’s dying for a drink right after saying Mass. He doesn’t believe what he’s saying but also doesn’t have a clue as to how to move forward or address his failings. Yes, the private sector is doing fine, if by fine you mean pretty goddamned awful.
Oh, and fyi, it looks like the fight is going to be a little different this time around. Already out? An ad with the remark.
As a follow up to the post below, another indication of how anemic our recovery is can be found in the “official” unemployment numbers. This week it rose .1% to 8.2%. I don’t have to belabor the fact that the number is a real lowball of the true unemployment rate. Suffice it to say, regardless of the number, the trend this month has been to the negative:
The American jobs engine hit stall speed in May, with the economy adding just 69,000 new jobs while the unemployment rate climbed to 8.2 percent.
As another summertime swoon looms, the Bureau of Labor Statistics reported that job creation missed economist estimates for 158,000 new positions and the jobless rate rose for the first time in nearly a year.
Labor force participation remains near 30-year lows though incrementally better than last month, rising to 63.8 percent.
The unemployment rate that counts discouraged workers rose as well, swelling to 14.8 percent form 14.5 percent in April.
To put it succinctly, the employment picture sucks and doesn’t at all appear to be getting better. Last months 115,000 new jobs has been revised down to 77,000 . Couple all of that with what we see happening in the rest of the world and it paints a pretty bleak economic picture for at least the near future.
James Pethokoukis lays out some of that picture for you:
– 1Q GDP was revised down to 1.9% from 2.2%. The previous four GDP quarters of Obama recovery: 0.4%, 1.3%, 1.8%, 3.0%. Keep in mind that research from the Federal Reserve finds that that since 1947, when two-quarter annualized real GDP growth falls below 2 percent, recession follows within a year 48 percent of the time. (And when year-over-year real GDP growth falls below 2 percent, recession follows within a year 70 percent of the time.)
– Initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 383,000. Claims have now risen in seven of the past eight weeks. The four-week moving average for new claims increased 3,750 to 374,500.
– Job cuts jumped by 53% in May from April in the United States, according to a report by consultancy firm Challenger, Gray & Christmas. CNBC also notes that “employers announced plans to cut 61,887 staff from their payrolls in May, 67 percent more than in the same month of last year. The figure represents the most job cuts since last September.”
– The Rasmussen Consumer Index find that 59% think the U.S. is currently in a recession.
Politically, this isn’t at all good news for an incumbent President seeking another term. With 14.8 percent of the workforce out of work or “discouraged”, the conventional wisdom says they’re unlikely to think signing on for another 4 years of this is worth it. And the economy, at this moment, and under his leadership, is showing no indication the next 4 years will be any different than these past 4 years.
That’s just ground truth for all the wishful thinkers out there on the left.
The eight hundred pound gorilla in the room when one discusses the unemployment rate is its accuracy.
8.1% of what? Apparently, it is 8.1% as measured by those still receiving unemployment benefits, i.e. “actively” seeking work (a requirement to continue to receive the benefits). Here’s the reality:
In April the number of people not in the labor force rose by a whopping 522,000 from 87,897,000 to 88,419,000. This is the highest on record. The flip side, and the reason why the unemployment dropped to 8.1% is that the labor force participation rate just dipped to a new 30 year low of 64.3%.
So, that means people have dropped out of the labor market and some have quit looking for work?
Yes. All one has to do is look at this chart and understand that a huge piece of the labor market has simply vanished from the statistics used to compute the official unemployment rate.
The current labor participation rate is equal to that of January 1982. From a high of 67.3% in January 2000, it has dropped 3% since. That is huge.
Yet, we’re only at 8.1%? Not bloody likely. Not if history is any gauge.
So who are the missing workers?
The conventional wisdom out there likes to explain that huge drop away by claiming that the baby boomers are most likely choosing to retire rather than seek work. They further claim there’s no reason to panic, it’s the old folks dropping out and they have their retirement to fall back on.
In fact, the older demographic has remained steady and, in fact, even seen job percentage increases among those thought to be retiring.
Job holders 55 and up have risen by 3.9 million — and fallen by 8.1 million among those under 55, Labor Department data show. It’s been 50 months and counting since payrolls peaked, a post-war record. Labor releases the April jobs report on Friday morning.
For the 65-69 and 70-74 groups, the employed shares are up 1.1 percentage points and 1.6 percentage points, respectively, over the past four years.
So much for that myth. In fact the early retiree level (i.e. those who claim Social Security at the lowest possible age – 62) dropped to 26.9% last year, the lowest since 1976.
As that final chart points out along with the accompanying stats, it isn’t the baby boomers who are causing the labor participation rate to drop. It is workers in the two younger demographics who’ve stopped getting benefits and still don’t have work.
Political implications? Well one can fudge the official numbers all one wishes, but unemployment is a personal thing. Official numbers don’t mean squat to someone without a job and is unlikely to convince them that things are better than they were.
Whether or not the official number drops below 8% before the election, the reality of unemployment to those 5 million without a job and not carried in the official number remains.
And it isn’t what they expected or hoped it would be:
A weak labor market already has left half of young college graduates either jobless or underemployed in positions that don’t fully use their skills and knowledge.
Young adults with bachelor’s degrees are increasingly scraping by in lower-wage jobs — waiter or waitress, bartender, retail clerk or receptionist, for example — and that’s confounding their hopes a degree would pay off despite higher tuition and mounting student loans.
An analysis of government data conducted for The Associated Press lays bare the highly uneven prospects for holders of bachelor’s degrees.
We continue to hear that we’re in a recovery, that we’re seeing better times, that all is now well.
Of course, it’s not. In fact, as we mentioned in the podcast last night, we’re not seeing anywhere near the growth necessary to shake this recession. Instead, we’ve found and are bouncing along the bottom (or at least what is the bottom for now – believe it or not, it could again get worse).
Unemployment numbers for the last two months have “unexpectedly” worse. And while the official rate is 8.2%, most realize the real unemployment rate is much higher and in double digits.
That is the world today’s college grads are facing. It is a buyers market, for those that are actually hiring college grads and so they are able to select among the best. Guess what majors are faring best?
While there’s strong demand in science, education and health fields, arts and humanities flounder.
Majors with immediate applicability in still growing fields of course. Meanwhile, there’s not much demand for the softer and less applicable fields. And even in the majors where demand is still high, entry level jobs are of a lower type:
Median wages for those with bachelor’s degrees are down from 2000, hit by technological changes that are eliminating midlevel jobs such as bank tellers. Most future job openings are projected to be in lower-skilled positions such as home health aides, who can provide personalized attention as the U.S. population ages.
This is one of those teachable moments. A sheepskin is no longer a guarantee to a high paying job. And that’s certainly true of those who indulge themselves in a humanities or art degree, etc.
College graduates who majored in zoology, anthropology, philosophy, art history and humanities were among the least likely to find jobs appropriate to their education level; those with nursing, teaching, accounting or computer science degrees were among the most likely.
While perhaps the brightest and best in those areas will indeed find good paying jobs coming out of the chute, the vast majority are going to be taking jobs, if they can find them, well outside their major field of study.
By the way, I use the term “indulge” above purposefully. It would be nice to indulge yourself in something you might enjoy in college and major in it. But then don’t whine when you find out that all of the companies you feel should have the benefit of your august presence aren’t as excited about your degree in gender studies as you are.
That gets down to the purpose of college to each person. Is it a means of achieving a job and a life style to which one aspires and a willingness to do what is necessary to accomplish that? Or is it a place one indulges themselves giving little or no thought to the reality that awaits them at graduation?
What we are seeing is the market for college grads making a very definitive statement. It is sending signals. It is telling everyone what type of degrees are being sought and which aren’t. And because of the tightness of the market, it is making decisions on merit, with the brightest and best capturing jobs and the also ran’s waiting tables.
"I don’t even know what I’m looking for," says Michael Bledsoe, who described months of fruitless job searches as he served customers at a Seattle coffeehouse. The 23-year-old graduated in 2010 with a creative writing degree.
Imagine that … creative writing degree. Wonderful stuff, but not to the market for those with college degrees. One would think that a person pursuing that sort of degree would have probably researched that and have a plan which might not include someone else hiring them first (i.e. selling their work on a freelance basis, etc. and knowing how to do that).
Had Mr. Bldsoe had a degree in physics or accounting or engineering, he’d stand a much better chance of being employed in his field of study. Then he could indulge himself in his creative writing passion. In fact, it would likely give him the means to do that.
Instead … “you want a tall or a grande?”
I still haven’t yet figured out why supposedly bright people can’t figure that little thing out. Markets are talking. Markets are sending signals. When you choose something as your major that these markets have no interest in, what do you suppose is going to happen unless you have a plan to go out on your own immediately?
They’re not going to hire you just because you feel your major is important. You’re going to hire someone if they feel the major is important and you have demonstrated competence in that field at a level they require.
This is the reality that, for the first time, many recent college grads are coming to grips with.
One thing this recession may finally do is drive home the idea that indulging yourself is a useless degree is not very bright or productive.
Want to study creative writing? Fine. They have minors as well in colleges. Make it your minor. But for heaven sake, take a clue and look at what is being demanded out there before declaring a major. Certainly it may not be your passion, but then unless you want to spend your days immediately after college waiting tables or hoping for a labor sellers market, where jobs are plentiful, you had better commit to a useful major.
I know, I know, that supply and demand thingy again. Gender studies majors aren’t into “markets” and “supply and demand” stuff. What’s wrong with me? They have a college degree, the world should be beating a pathway to their door, no?
Welcome to reality … and reality includes the immutable laws of economics whether one likes them or not. And right now, those with useless degrees find themselves on the wrong side of the demand curve.
Don’t like economics?
Then content yourself with making frappes.
Otherwise, it’s time to wise up, use that superior brain for what it was designed and “indulge” yourself in something the job market finds useful and valuable. Refusal to do that means a guaranteed rough transition into the real world, especially now.
Yes, he’s apparently finally realized that as goes coal, so goes his union (via Labor Union Report). Interesting comparison to Osama Bin Laden. My guess is the administration see’s coal in the same sort of light as they viewed bin Laden – an enemy. And thus, the results of their campaign against it – the loss of jobs, even if they’re union – are acceptable “collateral damage”.
The coal industry will suffer the same fate as Osama bin Laden under new climate regulations proposed by the Environmental Protection Agency, the head of the United Mine Workers of America said this week.
“The Navy SEALs shot Osama Bin Laden in Pakistan and Lisa Jackson shot us in Washington,” Cecil Roberts, president of the powerful union, said during an interview Tuesday on the West Virginia radio show MetroNews Talkline.
Roberts blasted Jackson, the EPA administrator, over the proposed regulations, which would limit greenhouse gas emissions from new power plants. Opponents of the regulations, including Roberts, say the new rules would be the death knell of the coal industry.
But, will Mr. Roberts actually do anything to actively protect the jobs of his union members?
While the United Mine Workers of America likely won’t actively oppose President Obama’s reelection bid, Roberts said the new EPA regulation could prevent the union from endorsing the president.
“That’s something that we have not done yet and may not do because of this very reason. Our people’s jobs are on the line,” Roberts said, adding that Obama has “done a lot of great things for the country.”
So United Mine Workers, why are you paying the dues to pay this man’s salary?
He certainly has made his choice hasn’t he? Unquestioning party loyalty over your jobs. He doesn’t care about them and obviously neither does the president.
I’m sure you’re surprised.
Two good jobs reports back to back has got the Obama campaign trying out some new campaign rhetoric about how what they’ve done has worked and that America is “back”.
Is it? Or is it premature to make that claim? Well, on the one side, most economists will tell you that job growth is usually a lagging indicator and good job growth usually means the other underlying numbers for positive growth are good too.
But are they?
Well, not necessarily. In fact, one of the other leading indicators of a strong economy, GDP growth, isn’t going to be so hot according to many economists. David Leonhardt reports:
But the jobs report isn’t the only measure of economic activity, and another major measure — of gross domestic product — doesn’t look quite so cheerful. The most likely situation is that job growth will slow in coming months, economists say, which will make President Obama’s economic narrative a bit more complicated than it now is.
On Friday, Macroeconomic Advisers, one of the most closely watched forecasting firms, reduced its estimate of economic growth in the current quarter to an annual rate of 1.8 percent, from 2 percent. And 1.8 percent growth does not generally lead to very strong job growth. In the fourth quarter of last year, by comparison, the economy grew 3 percent.
Beyond the current quarter, forecasters expect the economy will grow at an annual rate of 2 to 2.5 percent for the rest of the year, according to Bloomberg.
Based solely on the gross domestic product numbers, the obvious conclusion is that job growth will slow in coming months. Over the last six months, the average monthly gain in nonfarm employment has been 201,000; over the last three months, the average gain has been 245,000.
Sure enough, most forecasters do expect job growth to slow. Barclays Capital expects 200,000 jobs a month for the rest of the year. IHS Global Insight forecasts a slowdown to 180,000 jobs a month. Macroeconomic Advisers says it will slow to 140,000 jobs a month in the final three quarters of this year.
So what’s the drag on the GDP? What is it that is causing this less than optimistic forecast for job growth?
A combination of things:
Why do economists expect growth to slow? The warm winter has probably pulled some spending forward into the last few months and will reduce spending in coming months, says Joshua Shapiro, an economist at MFR Inc. in New York. Rising oil prices also play a role. So does the continuing debt overhang, which makes a sustained recovery difficult.
Spending slowdowns, rising oil prices and the debt overhang all combine to slow growth. Of course there are other things too that will effect it – increased regulation, for instance.
Annie Lowrey reports on other concerns:
First, economists say that temporary trends increased growth in the fourth quarter and may not continue into next year. Second, the economy faces significant headwinds in 2012: some from Europe’s long-lingering sovereign debt crisis, and some from domestic cutbacks beyond the control of President Obama, whose campaign would like to point to a brightening economic picture, not a darkening one. Even the Federal Reserve is predicting that the unemployment rate will remain around 8.6 percent by the time voters go to the polls in November.
The fourth quarter benefited, for instance, from wholesalers restocking inventories of goods like petroleum, paper and cars, giving a jolt to growth.
“We had lean inventories, so those required additional production to satisfy demand,” said Gregory Daco of IHS Global Insight. “But once inventories are restocked, there is no need to restock them anymore. That means there’s going to be less production,” he said.
Inventories have been restocked and oh yeah, there’s the European sovereign debt crisis to contend with. As well as:
Consumers also pulled back on their savings, helping to finance a recent spurt in spending. a trend that forecasters doubt will continue. Other short-lived factors include falling gasoline and commodity prices, and an increase in orders from Japanese companies returning to business after the devastating spring tsunami.
And finally we have the Chairman of the Federal Reserve:
He acknowledged that rising oil prices were “likely to push up inflation temporarily while reducing consumers’ purchasing power.” But the Fed expects the overall pace of increases in prices and wages to remain “subdued,” Mr. Bernanke said …
Bernanke also mentioned the continued depression of the housing market as a factor and he believes growth this year will be between 2.2 to 2.7 percent. Such growth would indeed put a damper on employment growth.
Whether or not the forecasts will prove true obviously remains to be seen. However the elements that should slow growth seem to be in place. Consequently, the forecasts are less optimistic than Obama’s political campaign would have you believe.
After many “false dawns” (remember “green shoots”?) the possibility of another one looms large. Sure, the economy is making progress. And yes, that’s good. But overhyping that progress and then seeing the numbers go south again could be very damaging to an incumbent president’s reelection hopes. Not that I expect that possibility to slow him down a bit from claiming to have saved the country from the abyss when in fact we’re simply crawling out from the one he helped create.
This could be happening on federal land as well, if the Obama administration would get out of the way. The Marcellus shale formation, found in Pennsylvania and New York, is reviving parts of the Rust Belt and providing good paying jobs for the area and much needed energy for the nation. The article is from the Pittsburg Tribune-Review:
Largely because of energy sector growth, including drilling for gas in Marcellus shale, life is changing for people in Washington County. Its job growth ranked in the top five nationally when federal statistics trackers compared the first and second quarters of 2011 to the year prior.
Butler County, bolstered by Westinghouse Electric Co.’s move from Monroeville, ranked near the top nationally in job and wage growth, according to the U.S. Department of Labor.
The drilling industry has helped people across Pennsylvania, said Kurt Rankin, an economist with PNC Financial Services Group, Downtown.
"It’s like found money," Rankin said. "It does have a secondary spillover effect in that the jobs that are created there are relatively high-paying jobs. That brings an entirely new income base to those counties."
From 2000 to 2007, the state recorded 17,000 to 20,000 workers in mining and logging, Department of Labor records show. That has jumped by more than 50 percent, largely since May 2009. More than 33,000 Pennsylvanians worked in that sector as of November.
This is waiting to happen in many areas, but government and environmentalists continue to block much of it, especially on federal lands. Despite Obama’s claim that “all-of-the-above” is his energy policy, his administration’s actions have hardly enabled this sort of growth in areas controlled by the federal government. Sen. John Thune outlined the reality of the President’s energy policy and it doesn’t match the President’s rhetoric:
Over the past three years, the president has systematically discouraged new energy exploration and development. His proposed five-year offshore lease plan sharply restricts the sale of leases for energy exploration and bans energy development on 97 percent of the available offshore areas. Since Obama issued his six-month deepwater moratorium in 2010, the number of permits issued for offshore energy development has declined a staggering 40 percent to 50 percent.
As a result of the president’s policies, energy production in Alaska and the Gulf of Mexico is projected to decline. Energy production in Alaska is threatened to such an extent that the future viability of the Trans Alaska Pipeline System, a vital source of domestic oil, is now in question.
The president is also restricting energy production on federal lands. While energy production from federal areas was relatively high in 2010 and 2011, almost all of that production was from leases issued before he entered office. Under the Obama administration, the issuance of new drilling leases and permits to drill on federal lands has declined by 44 percent and 39 percent, respectively.
Is it any wonder that his only fallback position when confronted by higher gasoline prices is to look toward tapping the Strategic Petroleum Reserve (which is not there to help lower gas prices)?
All-of-the-above? Another myth brought to you by the master of doublespeak. Remember that when you’re pumping $5 a gallon gasoline this summer.
A good job report this month drops the “official” unemployment rate to 8.3%. That, of course, will be touted as significant progress and, on one level, it is. The number of jobs created is above the maintenance level. That means a real net gain.
While the job creation is “well above expectations”, there’s another record that masks the real unemployment number.
Namely 1.2 million workers (another record) fell out of the labor force. That’s one reason the official rate looks good.
And, probably the most important number to be considered – the labor participation rate – fell to 63.7% which is a 30 year low and reflects the loss of those 1.2 million workers from the work force. Neither of those numbers are good.
That said, the report on the numbers of jobs created is a good report and may signal some growth. It is, for a change, above the maintenance level of jobs. But you have to keep in mind that in overall terms, and despite the official numbers, the job situation still has a very, very long way to go.