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Obama's Jobs Recession

Obama's Jobs Recession

By Larry Kudlow - June 4, 2011

Political advantage can be fleeting. A couple of months ago, during the winter quarter, job gains looked to be picking up, unemployment was easing lower, and President Obama's re-election hopes looked more secure. But things sure have changed.

In recent weeks, a whole bunch of new economic stats have been pointing to a sputtering economy -- maybe even an inflation-prone, less-than-2-percent-growth recession. Stocks have dropped five straight weeks, as they look toward slower growth, jobs and profits out to year end. And Friday's jobs report didn't buck these trends.

"Anemic" is the adjective being tossed around the media. According to the Labor Department, non-farm payrolls increased a meager 54,000 in May, while private payrolls gained only 83,000. A week or two ago, Wall Street expected 200,000-plus new jobs. Didn't happen.

Perhaps the most telling weakness in the jobs report comes from the household survey, which is made up of self-employed workers. Think of mom-and-pop owned stores and small businesses. Think of the Main Street entrepreneurial families who make up the backbone of the economy, and for the matter the country. And they vote, too.

Well, household jobs increased a paltry 105,000 in May, after falling 190,000 in April. The jobless rate is determined by the household survey, and you really need a couple hundred thousand new household jobs a month -- at least -- to lower unemployment. And you really need about 300,000 household jobs a month to put a little torque behind the Main Street economy. But with the lackluster May report, the unemployment rate edged up to 9.1 percent from last month's 9 percent and March's 8.8 percent.

Suddenly, President Obama has gone from re-elect to big trouble. The economic rug has been pulled out from underneath him.

So what changed in the last couple of months or so? Answer: A nasty oil-, gasoline- and commodity-price shock. It's eating away at economic growth and jobs. It's stalling the economy. And it has cut into consumer real incomes and business profits.

Much of this problem can be traced to the failure of the Federal Reserve's QE2 pump-priming campaign. QE2 has not produced growth, but it has produced inflation. In fact, the consumer price index over the past four or five months has been running close to 6 percent annually.

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Lawrence Kudlow is host of CNBC's The Kudlow Report and co-host of The Call. He is also a former Reagan economic advisor and a syndicated columnist. Visit his blog, Kudlow's Money Politics.

Copyright 2011, Creators Syndicate Inc.

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