It has become clearly evident the economy and job market won't be getting any better before the election. Although non farm payrolls rose 163,000 last month, beating economists’expectations in a Reuters poll for a 100,000 gain, the unemployment rate ticked up to 8.3% in July, marking 42 straight months of unemployment north of 8% since this administration took over, the longest stretch in history.
Underemployment has now risen to a full 15% and the labor force participation rate (the number of working-age [18-64] people actively looking for work) continues to lag at 63.7%. And that was an improvement from its all-time historic low. But the troubling numbers don’t end there.
The number of workers taking federal disability insurance payments hit yet another record in July, increasing to 8,753,935 during the month from the previous record of 8,733,461 set in June, according to the Social Security Administration.
The 8,753,935 workers who took federal disability insurance payments in July exceeded the population of 39 of the 50 states. Only 11 states — California, Texas, New York, Florida, Illinois, Pennsylvania, Ohio, Michigan, Georgia, North Carolina and New Jersey — had more people in them than the number of workers on the federal disability insurance rolls in July. In other words, we’ve hit new records in the lack of people working as well as the number of people on welfare.
This is progress?
It’s then no surprise that weak consumer spending held GDP growth to an annual rate of just 1.5%, even less than the 2% rate in the first quarter. And few expect the economy to accelerate in the second half of the year. So how does this compare with other administrations’ performance?
President Barack Obama can’t keep blaming the recession for his economic failures. Other presidents who stepped into office in the middle of recessions as well were clearly improving economic and jobs numbers by the time their campaigns for re-election rolled around.
Ronald Reagan was elected into office in the middle of a recession, and unemployment skyrocketed all the way to 10.8% during his first term – even higher than Obama’s all-time high of 10%. But by July of 1984, the rate had fallen to 7.5% and continued to fall.
Also, when Reagan was running for re-election in 1984, 85.2% of Americans were paying income taxes, according to the IRS – clearly way more people were paying into the system than receiving benefits.
Today, only 50.5% of Americans are paying any income taxes.
In other words, we are have reached a tipping point. For the first time in this country’s history, more people will be on the wagon than out in front pulling it. If the current economic trends are any prediction, an Obama re-election will probably complete this transformation.
If we compare GDP growth under Obama to Reagan, the current President again falls short.
We’ve seen this episode play out before. The Carter administration pursued similar economic policy as this administration: more government bureaucracy, more government regulation, and more government spending, and they produced the same results as this one has.
The Reagan administration, on the other hand, scaled back government intervention, enacted pro-growth tax reform, and allowed the private sector to do its thing.
It might be time for Reagan 2.0.