The Federal government released the latest data on the economy recently and the data is not good, according to a July 8, 2011 Associated Press article covering the findings:
- Employers added the fewest jobs to the economy in nine months, 57,000.
- The economy needs to add 125,000 jobs a month just to keep up with population growth and twice that many just to start bringing down the unemployment rate. At 57,000 jobs in June, that goal was missed by about 73%.
- The unemployment rate rose to 9.2%.
- The number of jobs created in May, while low to begin with, was readjusted lower in this June report.
- 14.1 million Americans who want a job cannot find one.
- If over 250,000 Americans had not stopped looking for a job the unemployment rate would have been higher.
- If you include all of those Americans who have stopped looking for a job and those that are working part time but who would prefer full time, the underemployment rate moved up from 15.8% to 16.2%.
- Unemployment has topped 8% for 29 straight months, the longest such streak since the Great Depression years in the 1930s.
- At the same point in the past three recessions, after the recoveries had begun unemployment had already dropped to 6.8% on average.
- Those lucky enough to have a job saw their hourly wages drop last month.
- The number of temporary workers also dropped, a bad indication since temporary workers is a leading economic indicator for future economic growth.
- Economic growth for the second quarter is expected to be weak and similar to the 1.9% growth in the first quarter of 2011. Economic growth for the entire year of 2011 would have to be 5% to being reducing the unemployment rate.
Bad news all around. And to think we trusted the Federal government and the political class to spend $830 billion in a doomed economic stimulus package to get us to this point. We trusted the Federal Reserve Board to print $600 billion worth of money, reducing the strength of the dollar and our consumer purchasing power, in the second quantitative easing effort, to get us to this point. We trusted the political class to spend tens of billions of dollars on crackpot economic incentive programs like Cash For Clunkers and First Time Home Buyer programs to get us to this point.
This all reminds of an old baseball tale. Ralph Kiner was an excellent outfielder of the Pittsburgh Pirates back in the 1950s. His biggest asset as a ball player was his ability to hit a lot of home runs. One year he hit over 50 home runs in a single season, more than anyone else in the league even though his team, the Pirates, finished in last place.
At contract time after his good home run season, he sat down with the Pirate front office personnel and said he deserved a raise since he led the league in home runs the year. However, the front office people correctly pointed out that even though he led the league in home runs, they really did not need to pay him more or keep him on the team since they could finish in in last place without all of his home runs and an increased salary.
Same thing with the economy and political class. Do we really need them to do anything more or waste more taxpayer money since economically speaking, we are still sitting in last place, given the dire economic numbers above. The nation has probably expended over a TRILLION dollars worth of wasted wealth (over 50 home runs in the Kiner example) with nothing to show for it, still sitting with a last place economy. What a disgrace.
In order to get out of last place, we need to implement a number of significant refrom steps:
- We need to fix our election processes in order to dump the current political class out of office and replace them with some smart Americans who 1) know how to run an economy and 2) are not so scared of not being re-elected that they actually show some fortitude and courage to make the difficult financial economic decisions for the good of the country, their re-election chances be relegated to a secondary priority.
- We need to force all incoming members of any Presidential administration and Congress to take and pass a basic course on economics in order for them to at least understand how their lame proposals and programs will not work before they implement them.
- We need to start systematically downsizing government by 10% a year for five years in order to get our out-of-control government spending in line with a reasonable tax plan and reasonable tax revenue stream. This step would also get the political class focused on a much smaller but the most important set of priorities, a set of priorities so small that they actually can focus on them and actually accomplish them.
By the way, the bad economic news, in case you have not heard, does not stop with the above horrific economic data. According to a March 21, 2011 article in Business Week:
- The price of wheat has grown 27% since last June.
- The price of coffee is up 104% since January, 2007
- The price of milk is up 23% since last November.
- The price of sugar has tripled since June, 2007.
- The price of cocoa has double since January, 2007.
Combine these huge price jumps in commodities with the fact that the Federal Reserve Board has thrown hundreds and hundreds of billions of newly printed dollars into the world economy and it is not hard to see that we are rapidly approaching the conditions that will make the stagflation of the Carter Presidency reappear: high inflation, high unemployment, low economic growth. Strike one, strike two, strike three.
Doesn’t anyone around here, or in Washington, know how to run an economy? Apparently not, if we are about to enter same phase of economic distress that we experienced almost forty years ago under Jimmy Carter. Looks like the political class has learned nothing when it comes to economics. Like Ralph Kiner and his Pirates, looks like the American consumer and our economy will soon be in last place despite the historic waste of taxpayer funds on failed economic policies.