Yesterday was the six month anniversary of President Barack Obama’s $787 billion stimulus package. Since the “American Recovery and Reinvestment Act” became law, the United States economy has shed nearly 2.8 million net jobs. When Obama signed the stimulus the nation’s unemployment rate stood at 7.6%. Today it is 9.4%. Nationwide, a total of fifteen states are now suffering from 10% unemployment. No wonder 57% of Americans recently told Gallup that the stimulus package is either having no impact on the economy or making it worse.
The White House has a different view than the American people. Last week when new data revealed that United States Gross Domestic Product fell by only 1% in the 2nd quarter of this year, President Obama rushed to the Diplomatic Reception Room to announce that, “in the last few months the economy has done measurably better than we had thought … And as many economists will tell you, that part of the progress is directly attributable to the Recovery Act.” Oh really? As stimulus tracker ProPublica points out, only 12% of the $580 billion in new spending of the bill has actually been spent. As New York University Associate Professor of Economics Mario Rizzo asks: “what is the mechanism by which about $70 billion in extra spending reduces the rate of increase in unemployment and reduces the rate of decrease in output in a $14 trillion economy? If my advanced arithmetic is correct this is ½ of 1 percent of the GDP. What kind of Super Multiplier is that?”
And that reduction in unemployment from a June high of 9.5% to July’s 9.4% is nothing to get excited about. The U.S. economy still lost another 247,000 jobs last month meaning the dip in the unemployment rate came entirely from the fact that 422,000 people stopped looking for work entirely. As a result the labor force participation rate fell to 66.5% which equals the lowest recorded number of the current recession. And when government workers are removed from the mix, only 59.5% of Americans are participating in the private labor market, the lowest level in 25 years. Worse still, new job creation continues to drop. According to the Bureau of Labor and Statistics Job Opportunities and Labor Turnover Survey, which shows the proportion of workers starting at a new job each month, a record low 2.9% of Americans found or switched jobs in June.
American eyes often justifiably gloss over when economic statistics are thrown around, which is why concrete examples like the Obama administration’s much hyped “Cash for Clunkers” program offer such valuable examples of why the left’s Keynesian policies are destined to fail. An Obama stimulus writ small, Cash for Clunkers seeks to rebuild the American economy and help the environment at the same time by borrowing money to spur new spending and car manufacturing now, while also simultaneously decreasing emissions. Cash for Clunkers has failed at everything but adding to the debt. It has not created any new car sales, but only shifted them into a narrow two month window. It has not stimulated any new consumer spending as consumers just cut back in other areas to pay for their new cars. And finally, it has done nothing for the environment since the new cars get driven more than the clunkers, and the clunkers are then destroyed a tremendous waste of resources that only hurts the environment. It is no wonder that the President did not celebrate yesterday’s stimulus anniversary more prominently. If this is what his relationship with the American economy looks like after just six months, the honeymoon is assuredly over.