Recession chugs on, except in government

White House apologists were quick to point to the unemployment rate decline from 10 percent to 9.7 percent as evidence that the recovery is gathering momentum and that President Obama’s policies — especially his $787 billion economic stimulus bill Congress approved last February — are “working.” But the back story behind the figures provides cold comfort.

First, the drop to 9.7 percent unemployment does not reflect the creation of new jobs that normally accompanies an economic recovery. The number of new jobs is actually declining. Total nonfarm payroll employment, for example, dipped by an additional 20,000 positions after a December decline of 150,000 positions. The unemployment rate the day Obama took office last year stood at 7.6 percent and 134.6 million people had jobs. When he signed the economic stimulus, Obama promised the bill would bolster the economy sufficiently to keep unemployment below 8.0 percent. But the unemployment rate has exceeded 8.0 percent since last fall, and total employment stands at only 129.5 million. The stimulus has been a bust.

Second, anybody who thinks the job situation is going to improve dramatically in coming months is not paying attention to what’s going on behind the unemployment rate. The Hudson Institute’ Diana Furchtgott-Roth notes that “the labor force participation rate declined from 64.9% to 64.6%, the lowest since August 1985. This means that more and more Americans are dropping out of the labor force. Last month 661,000 Americans left the labor force.”

Further, adds Furchtgott-Roth, who was formerly the Department of Labor’s chief economist, “the percent of Americans unemployed for 27 weeks and longer rose from 38.7% to 39.8%. This is the highest since [the Bureau of Labor Statistics] started keeping records in 1948.” Worst of all, she said, “the number of jobs created in temporary help services, an indicator of future demand, actually fell from 55,000 to 46,000. So not only are workers not hiring permanent workers, they’re hiring fewer temporary workers too.”

Third, among the few sectors of the economy showing net employment growth over the past year is the federal government. The federal civil service is rapidly expanding as Obama increases the size of government, with 33,000 new positions being added in January alone. Only 9,000 of those new slots were for temporary census jobs. In other words, what we are seeing is good times for the public sector and the growing prospect of a continuing and perhaps even deepening recession for everybody else.