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GHEI: Obama’s job-losing recovery
Welcome to the worst exit from a recession in modern history
Question of the Day
Economists may say the United States has been in a recovery since June 2009, but it hasn’t been your father’s recovery — or your grandfather’s, either. Job losses, anemic growth and increasing domestic and global uncertainty have conspired to produce a recovery that’s barely there. Today, we are experiencing the most feeble exit to a recession since the end of World War II.
The postwar period has seen 11 recoveries, but the current jobs picture is worse than any of them. By the averages, the economy by now should have regained about 350 percent of the jobs lost during the preceding recession. In the 1981-82 recession, for example, 2.8 million jobs disappeared. Thirty-seven months later, 9.8 million jobs had been created, leaving a net gain of 7 million positions. This time around, we shed 8.8 million jobs and have regained just a bit over 4 million, leaving a deficit of some 55 percent.
The proportion of the long-term unemployed and the average length of unemployment are at historic highs. Some 41 percent of the jobless — more than 5 million Americans — have been out of work for more than six months. In previous business cycles, this figure typically was closer to 20 percent. The average time spent in the unemployment lines is at a historical high of over 40 weeks. In contrast, during the business cycle of the early 1980s, even when unemployment hit a peak of 11 percent, the average duration of unemployment was 21 weeks, and it declined quickly from that peak. Long-term unemployment is particularly troublesome because it erodes savings and job skills, leaving even workers who are fortunate enough to find a job with an earnings gap that is never closed.
The reason there are no jobs is the economy as a whole is stalled. Growth has slowed to a pitiful 1.5 percent. In total between 2009 and 2012, the economy expanded just 6.8 percent. Average growth in previous recoveries was more than double that amount, at 15.5 percent. Instead of accelerating, we’re headed in the opposite direction toward stagnation.
There are differences between the feeble, “barely there” recovery of the present and the roaring comebacks of the past. The euro crisis is slowing growth on our side of the Atlantic because the European Union is one of America’s largest trading partners, but the U.S. domestic situation is equally troubling. Taxes are set to increase sharply next year, unless Congress acts. The uncertainty over whether this will happen or not is a key factor dampening investment decisions. The regulatory burden has grown sharply in the last few years, and government spending as a proportion of gross domestic product has increased, crowding out the private sector. This decline in economic freedom, as measured by almost every index, has thrown a wet blanket over entrepreneurs who otherwise would have considered expanding their businesses.
Congress needs to reduce these barriers to private activity if we ever want to see the roaring, true recoveries of the past. Otherwise, America’s future will remain stagnant.
Nita Ghei is a contributing Opinion writer for The Washington Times.
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
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