Yes, you read that correctly. The number of net new jobs the economy created in August is nada, via CNBC:
The US economy created no jobs and the unemployment rate held steadily higher at 9.1 percent in August, fueling concerns that the US is heading for another recession.
It was the first time since World War II that the economy had a net zero jobs created for a month.
Economists had been expecting the report to show a net of 75,000 jobs created, an unusually low number considering the US is technically more than two years removed from the end of the last crisis.
Markets had been closely watching the August report in hopes that the employment picture would begin to show signs of recovery.
Markets are going to waiting a long time for the employment picture to significantly improve. There is simply no reason for employers to add to payroll. Nobody expects Obama to propose anything different next week than the asinine policies he’s pursued since his tenure began. The very policies that created the mess we find ourselves in: More unemployment benefits, tax credits for windmills and solar shingles, payoffs to unions or friendly CEOs, crony capitalism, cash for clunkers, tax credits for electric cars that don’t work, tax credits for companies to hire the unemployed, etc., etc.
That last nugget illustrates more than anything else the fundamental ignorance which characterizes Obama’s understanding of the economy. It’s being reported that he wants to give $5,000 tax credits to employers for each employee they hire. Leaving aside the fact that Obama’s unprecedented spending and debt accumulation has left us on the verge of bankruptcy, what is he thinking? How is this an incentive for businesses to hire? How will this increase demand for whatever product or service they produce? Businesses hire people when there’s work that needs to be done, not because the government is handing out taxpayer-financed bribes. The math doesn’t even make sense. Why hire an employee at, say $40,000, in order to receive a $5,000 tax credit? On what planet does this make sense? Until there’s a significant and sustained increase in consumer demand, there’s no reason for businesses to hire.
Even if these so-called incentives did make sense (they don’t), they pale in comparison to the disincentives Obama has piled on top of businesses since the day he was inaugurated. Just this week he proposed billions more in regulatory red tape that makes no sense at all, economic or otherwise. This, of course, is only the latest Obama assault on the economy. Who knows how many jobs have been destroyed (or not created in the first place) due to such wondrous policies as Obamacare, Dodd-Frank, the suicidal energy “permitorium”, and his promise to enact an enormous tax increase in 2013 on the very individuals and business who create most of the jobs, just to name a few. How any of these schemes will entice businesses to hire more people is impossible to fathom.
Yesterday Obama’s Office of Management and Budget (OMB) predicted that the unemployment rate will remain in the neighborhood of 9% through next year’s election. This is noteworthy. The OMB is notorious for basing economic projections on “rosy scenario” assumptions. That is they tend to put an optimistic spin on economic data in order to portray the president, and his economic policies, in the best possible light. This, of course, did not begin with Obama as the OMB has always had this reputation, hence the need for the CBO. That said, that the OMB is projecting a politically devastating 9% unemployment rate in November 2012 leads me to believe that it could well be significantly higher. Most economists believe the economy needs to add a net 250,000 jobs per month to lower the unemployment rate. There is nothing in Obama’s latest economic plan to enhance prospects for that kind of labor market. Quite the contrary. In her RNC speech exactly three years ago tomorrow, Governor Palin predicted that Obama’s policies, in enacted, would have the precise effect they’ve had:
…Government is too big … he wants to grow it.
Congress spends too much … he promises more.
Taxes are too high … he wants to raise them. His tax increases are the fine print in his economic plan, and let me be specific.
The Democratic nominee for president supports plans to raise income taxes … raise payroll taxes … raise investment income taxes … raise the death tax … raise business taxes … and increase the tax burden on the American people by hundreds of billions of dollars. My sister Heather and her husband have just built a service station that’s now opened for business — like millions of others who run small businesses.
How are they going to be any better off if taxes go up? Or maybe you’re trying to keep your job at a plant in Michigan or Ohio … or create jobs with clean coal from Pennsylvania or West Virginia … or keep a small farm in the family right here in Minnesota.
How are you going to be better off if our opponent adds a massive tax burden to the American economy?
If only a few more people had listened. But they didn’t and, for all his failures, Obama has succeeded at one thing: Transforming America from a vibrant economic power into a debt-ridden nation in decline, with 9% plus unemployment rates as far as the eye can see. Mission accomplished.
Update: Several readers, either in the comments or via email, have asked why the unemployment rate didn’t rise when no new jobs were created in August. Good question. This is due to the fact that the nation’s official unemployment rate, or U3, doesn’t take into account underemployment or discouraged workers. Underemployment occurs when, for example, a petroleum engineer loses his full-time job (likely due to Obama’s assault on the energy sector) and is only able to obtain work flipping burgers part-time at McDonalds.
A discouraged worker is one who would like to work, but who has given up looking for work and thus, is no longer counted as part of the labor force. Mathematically, this causes both the numerator and the denominator used in the formula to calculate the official unemployment rate to be smaller by the same amount and, consequently, the U3 rate to be lower. Therefore, the U3 rate understates the true economic pain resulting from unemployment. A broader measure, which takes this into account, is the U6 rate. The U6 rate is currently in excess of 16%. To further indicate how misleading the current U3 rate of 9.1% is; consider this Jim Pethokoukis tweet from earlier today:
11.4 percent: That would be the U-3 unemployment rate if labor force was as big as it was when Obama took office
In any event, the official unemployment rate is “only” 9.1% because so many potential workers have been chased from the labor force. Hope and Change.
Update II: Just for fun, here’s Rick Santelli slamming Obama over the jobs report earlier today on CNBC’s “Squawk Box” via the Daily Caller:
“I get a real kick out of how everybody calls what we went through in July and August ‘the spectacle,’” Santelli said. “The darn spectacle was that getting up to these trillion dollars’ worth of debt, thinking that the action trying to address it is the spectacle is exactly half-button backwards, just like the interpretation that if you dump all this money into the economy, the government will look like they are doing something and that will create a positive dynamic. We have mountain of debt that isn’t going away and all the problems are here to stay, and anybody who tells you that is a good thing ought to get out of the business of helping the government down the road.”
Moody’s Analytics chief economist Mark Zandi countered that government inaction and the prospects of people not getting their Social Security checks was a scary proposition and one which President Barack Obama said was legitimate to fear. That had an impact on the economy, but according to Santelli it was a lie.
“[Obama] was fibbing,” Santelli said. “There was plenty of money. That’s the spectacle. You’re right. That’s the spectacle. Shame on him.”