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AP Sobs: It’s Really Hard To Create Jobs

The Associated Press explains it all:

Formula shows why it’s so hard to cut jobless rate

By Jeannine Aversa, AP Economics Writer

January 21, 2010

WASHINGTON — The economy’s 5.7 percent growth last quarter — the fastest pace since 2003 — was a step toward shrinking the nation’s 10 percent unemployment rate.

There’s just one problem: Growth would have to equal 5 percent for all of 2010 just to lower the average jobless rate for the year by 1 percentage point.

And economists don’t think that’s possible.

Most analysts say economic activity will slow to 2.5 percent or 3 percent growth for the current quarter as the benefits fade from government stimulus efforts and from companies drawing down less of their stockpiles.

And, lest we forget, 3.3% GDP growth was called a recession under President Bush by our watchdog media. But now they want to make sure that we all realize it is spectacular growth in the era of Obama.

That’s why the Federal Reserve and outside economists think it will take until around the middle of the decade to lower the double-digit jobless rate to a more normal 5 or 6 percent.

Meanwhile, as the Associated Press has already helpfully explained, 10% unemployment is the ‘new normal.’

Even though the selfsame Jeannine Aversa of the AP cried bloody murder when the jobless rate was 5% under President Bush.

Another way of looking at it: A net total of about 3 million jobs would have to be created this year to lower the average unemployment rate by 1 percentage point for 2010, economists estimate. Yet even optimists think the creation of 1 million net jobs is probably out of reach this year.

Why is that? We were told a couple of weeks ago by our media masters that Mr. Obama created or saved 2 million jobs in the last year, when the country is in recession.

So why can’t he create or save even more now when we are enjoying this spectacular recovery?

High unemployment poses a risk to the unfolding recovery because it leads consumers to spend less, keeping economic growth weak. A sharp pullback in spending might even push the economy back into recession. Joblessness also represents a danger for President Barack Obama’s Democratic Party in this fall’s congressional elections

Which is why the Associated Press is going to begin this propaganda campaign to explain why it is next to impossible to change the unemployment numbers.

To get a sense of just how deep a dent the worst recession since the 1930s has made in the economy, consider this: The economy shrank 2.4 percent for all of 2009 — the sharpest drop since 1946. It was also the first annual decline since 1991…

Which is to say, it’s all Bush’s fault.

Mark Zandi, chief economist at Economy.com, and Bill Cheney, chief economist at John Hancock, agree that the economy would have to grow roughly 5 percent for all of 2010 just to ratchet down the average unemployment rate for the year by 1 percentage point — to a still-high 9 percent.

Their math is based on Okun’s law, named for economist Arthur Okun. In 1962, Okun produced a formula for the connection he saw between unemployment and economic activity.

Exactly how much GDP growth is needed to lower the unemployment rate for a given period varies. That’s because the formula involves several factors besides GDP growth. It also considers, for example, businesses’ productivity growth

Economists say the formula hasn’t always held up perfectly in recent decades. Rather, it’s relied upon as a rough rule of thumb for determining how much growth will be needed to lower unemployment

So the AP has to trot out an obscure (and highly imperfect) ‘law’ that nobody has ever heard of before — from their always surprised (and wrong) economists – to try to explain away Mr. Obama’s high unemployment numbers.

Instead of facing the painfully obvious fact that you cannot grow out of a recession by simply creating slush funds and handing out more government jobs.

This article was posted by Steve on Sunday, January 31st, 2010. Comments are currently closed.

16 Responses to “AP Sobs: It’s Really Hard To Create Jobs”

  1. proreason says:

    Here’s the truth about unemployment.

    The country was headed toward a mild recession in early and mid 2008. Politics aside, the markets were becoming aware of the toxic loans that the government created with its Loans-to-Deadbeats social engineering, and was adjusting downward. The downward trend was exacerbated by the fear that the Democrats could win in 2008.

    When markets head down, businesses hunker down, and try to survive instead of grow, so people are laid off.

    As in the prior 10 recessions, the country would have recovered from that within about a year.

    But Omamy’s criminal co-conspirators needed a “crisis” to take advantage of to get the Moron elected. So Soros and company, pricked the housing bubble and created a panic in September 2008. On cue, Paulsen paniced (or perhaps was in on the scam), and the panic multiplied.

    TARP was the least part of the problem. The real problem was that Soros and company drove the market down over 50% to get Obamy elected. TARP added to that woe, but it is not the dominant factor in causing the pain then or since then.

    The 50% drop in the market made 2 things happen:

    – many Americans were wiped out, including a high percentage of senior citizens. And unlike Goldman Sachs and the the high financiers, average Americans don’t have a sugar daddy to bail them out. So the trillions of dollars that were wiped out for average Amercians is lost, gone, poofed. And that money can no longer fuel job creation by being invested in businesses, EVER. It’s gone for good.
    – because of the monstrous drop (second biggest in history) in the market, consumers stopped spending on a dime, which cut revenue dramatically, and businesses of all sizes were forced to take drastic measures to become profitable again. Businesses MUST be profitable, or they go bankrupt, and they can’t wait long. Period. So they cut costs everywhere they could. That meant that millions of workers were laid off, very quickly. Eventually, these businesses will begin hiring again, but it will take YEARS to get back to where they were.

    All of this is compounded by a 3rd factor that is also restricting hiring. In Obamyland, businesses are hated. He hates banks. He hates insurance companies. He hates oil companies. He hates financial companies. He hates medical equipment manufacturers. He hates pharmaceuticals. He hates hospitals. He hates doctors. He hates any company that disagrees with him. He hates the military industrial complex. He hates regular car companies. He hates airlines. He hates non-green businesses. He hates speculators. He hates traders. He hates financiers. He hates any company that dares to make a profit.

    So he threatens, he taxes, he regulates, he demonizes, he restricts salaries and bonuses, he browbeats, he lectures, he has his daily 2 minutes of hate, he redistributes money to his croneys and supporters who also hate businsesses, he does everything in his power to punish every business that he can.

    So what do you think businesses do under those conditions? Do they think it’s all a lark, and gear up for mega-expansions? Do they say to themselve, oh we will just forget about making a profit while Obamy is in office? We just won’t go bankrupt, even though we are bankrupt.

    Nope. What they do is to hunker down. They cut more staff, and don’t replace them. They try to wait it out. They try to survive in the hopes that his cabal will be defeated.

    Now add on top of that the Moron’s policies against free trade, the policies that favor unions vs business, the uncertainty about what the clown might come up with next, the marxist rhetoric, the knowledge that unless you kiss his ass, it will just get worse…..and its a recipe for the perfect storm.

    The storm is unemployment…..as far as you can see. Oh, there will be some ups, and many downs, but the trend is down, way down, my friends.

    You see, it isn’t just a matter of some, ha ha, “policy differences”, or some “philosophy differences”, or some changes around the margins, or some modest hidden tax increases. It’s a matter of your survival. If you aren’t in government, you aren’t safe. And even if you are in government, your job depends on the taxes confiscated from private businss. There really is no safety. Unless you are a member of the royal court, of course.

    We are all so f*ed.

    The only chance of survival is to crush him. If not at the ballot box, then by any means possible. When that happens there will be such a hiring rush that boats will sink because of the Indians and Chinese fighting to get into the country.

  2. Rusty Shackleford says:

    Pro, your analysis is inescapable. Clear, to the point.

    During the past year, though I’ve been contemplating a “gamesmanship” kind of approach that the boy might have. That is, they knew the economy was going into recession, so they made it worse so that the one could, by clever application of rhetoric and magic wand wavery, appear to make it all go away through his mystical, magical mystery tour through stimlatus. However, as I’ve mentioned his ignorance of all things, he and his fellow manipulators, anticipating the almost automatic rebounding of the economy, as it always does, didn’t count on the fact that everything they did to make the economy worse and thus, engineer his rise to godhood, would put it at an all-time low and keep it there.

    Meanwhile, they look at each other and say, “Hey, what happened? I thought you said it was just a recession and we’d be out of it by September of 2009?”

    Whether by accident or by design, his manipulations and those by his supporters and fellow communists were acts of pure stupidity. That is, from a capitalist viewpoint. From a statist viewpoint they are wagons on the path to socialism.

    Although I don’t care how or why they happen, I know the end result and I don’t like it. It is that and many other reasons that I am flat against anything he does or says. He’s bad news for us and the whole world that used to be able to count on the US dollar. Now we’re going the way of Great Britain….fast.

    • proreason says:

      “they made it worse so that the one could, by clever application of rhetoric and magic wand wavery, appear to make it all go away through his mystical, magical mystery tour through stimlatus.”

      I’m convinced the Moron’s advisors thought the recession was over when he came into office, and that employment would head up immediately. There’s a famous chart out that shows unemployment in the last 10 recessions and in each of them, after 13 months, employment headed up. In their minds, the recession had started in Oct 2007, so Jan 2009 was time for unemployment to head back up. It was 10 for 10. That’s why an otherwise very smart economist like Christine Rohmer was willing to signon to the very public message that the Porkulus would stop unemployment in its tracks….even though she knew absolutely that there was no way money would flood into the economy for months. If the Prokulus worked according to their theory, it still couldn’t possibly stimulate the economy for many months.

      Now, from the Moron’s perspective, it didn’t matter. If emplyment headed up, he would take credit for it. If it continued down, he would blame it on Bush. In either event, he was jamming square Marxism through the round American hole (so to speak).

      And here we are.

      His whole strategy is:

      1. Marxism no matter what.
      2. Propaganda, lies and deception to cover his tracks.
      3. Play the race card when he is caught with his pants down.

      It could still work. But he certainly thought he would be further along at this point than he was.

      The country isn’t quite as stupid as he thinks.

  3. GL0120 says:

    Rusty and PR;
    You two have hit the nail squarely on the head. The nail that the mainstream media has been covering up.
    As Rush has repeatedly said, no one can be as naive as Our Dear Leader is being portrayed.
    He makes decisions designed to change the U.S. from capitalism to socialism and the press tries to paint it as a well intentioned effort that just didn’t work out. Why didn’t it work out? Because of that evil bastard, George W. Bush.
    According to Our Dear Leader and his loyal followers, GWB, the moron, enacted policies which drove us to the brink of disaster.
    But how could have such a moron lead the democratic led congress astray and how could he have enacted such complex policies that trillions of dollars in giveaways can’t fix?
    Either Bush was an evil genius or smoke gets in our eyes by means of being blown up our butts by the democrats.
    Me, I’m betting it’s the smoke, the very smoke that’s meant to prevent people from seeing what’s happening until it’s too late.

  4. puhiawa says:

    Okun’s law is really no such thing. It was an observation. It has a limited predictive value, in that it has been proven to be empirically wrong for the last 30 years, it still mimics reality. Since Okun, the USA has moved drastically away from a manufacturing/natural re4source/farming economy to one built on foreigners doing all the work so we do not have to work with pollution and nasty chemicals. Further, since Regan, the USA has virtually litigated itself out of the capitalism that underlies Okun’s law. In fact the best analogy of what is happening to America is found in news rooms. As a newspaper’s circulation goes down, so do the need for reporters to tell us how to think like the newspapers. And do you know what the scary part is? Like Obama, the editors double down on all they are doing wrong in spite of the demise.

  5. Rip Cord says:

    Yeah, running your mouth as a candidate is sure easy, Barak. It just rolls so easily off your tongue. But you and the Democrats have been plotting this anarchy in our economy for a long time. Since your ACORN days. That why you were so SURE this country was going to lurch to your Bolshevik Leftist Agenda. Well we have your number punk in chief and we will see you in 2012 when Sarah Palin, a REAL American, becomes President of the United States!!!

  6. wterrier says:

    Great observations as usual Proreason and Rusty. Always value your comments here.

    I would remind you of the spike in CL (WTI Crude Oil) to $147 leading up to the election, where the double top formed. This drove gasoline @ retail almost to $5 a gal, which was guaranteed to put the brakes on the economy and consumption. People had to take a C note every week to the Mobil station to fill up the SUV for the coming week’s commute!

    Then after the election, the bull rally in oil ended, until CL hit bottom in the $30’s! No outbreak of war, no cutoff of supplies, no fundamental reason for this whipsaw action in the oil market.

    • proreason says:

      The incredible run-up in the price of oil and the 6-week crash was just one of several miracles that happened during the 2-month period prior to the election.

      Recall that oil was one of McCain’s biggest issue. It is one of the reason he picked Sarah Palin. During the summer, as you say, the price sky-rocketed and in late August the price of gasoline was over $4 per gallon in many markets. It was playing directly into McCain’s strength.

      Then, for no apparent reason, it crashed. By Nov 4 it was under $2 in most markets, the magic line where people simply are not worried about it.

      Gee, isn’t Obamy lucky.

      – Stock Market cratered 50% in the 2 months prior to the election. Fear was in the streets. Many seniors who had been doing quite well and might have voted for McCain were wiped out.
      – Price of gasoline cratered 50% in 6 weeks prior to the election. McCains greatest issue was dead.
      – Paulsen and Beracke on Sept 18 declared the greatest financial crisis in the history of mankind. Bush’s fault, of course. Clear evidence of Republican malfeasance. And McCain was practically a clone of Bush in so many way. What a coincidence, no?

      Yet in June, both Bernack and Paulsen had made major public proclamations that all was well.

      Gee, isn’t Obamy lucky.

      Any day now the mainstream press will be exploring the most riotous financial events and the greatest financial coincidences of the past 4 generations, all of which happened in a 2 month period just prior to the most consequential election since 1980 and just after McCain Palin had grabbed the lead from the marxist candidate….just as soon as they have exhaused the topic of the Thunderbutt’s bare arms.

    • tranquil.night says:

      Always loved that people were so relieved by the sudden gas price drop they never really asked why it was so high to begin with, especially when quarterly reports kept saying that there were no shortages, no strain of supply, and reserves always came in ‘higher than expected.’ When price, be it stock, commodity, is behaving contrary to the pragmatic laws of simple economics, that’s when it’s almost glaringly clear when Goldman-Sachs, Société Générale, and co are leading what you call those bull rallys.

      It all comes down to short-selling, a trading mechanism like 98% of American investors still aren’t savvy to I hear. If you’re analyzing data and all the data is correctly indicating a huge drop in price, then day-traders can do something called ‘short-sell’ where they borrow shares and sell them off before they drop in value. Then they buy back the shares at the lesser value and give them back to the original owner while taking the profit. So instead of buy low/sell high.. sell high/buy low. The profits are massive, way bigger through short-selling than traditional investing. Why? Prices fall steeper/faster than they rise, in most cases.

      Short-selling actually serves an important function for the free-markets, I’m told, but I couldn’t explain exactly what that is. I intend to learn so that I can start making serious cash. The problem is that with traders making money whether the market is rising or falling it means that – yes – essentially designated groups that can greatly impact the economy (or economic policy) can majorly profiteer off a collapse or recession as well as during growth. So that being understood, it’s outrageous now not to see exactly who DID profiteer off the 2008 collapse; the story is in the volume of shares traded in those weeks before our ‘imminent financial collapse’. GS, the Fed, and the Democrat party, who now are using the very thing they did as an argument against the system they exploited. Awful, outrageous.

      Posted at biggovernment, ‘We are so screwed’, pretty much summing up nicely all the reasons why we aren’t buying the 5.7% growth (both as it’s reported and as a sign of recovery).

      There’s no sunshine in Davos, either.

  7. GTBurns says:

    If Pres. Obama is purposely stagnating the economy, according to the Alisnky rules will somehow keep him in power, He is living with his head up his ass. The public is already become frustrated and turning against him. The Scott Brown victory has a harbinger of things to come for the DEMS in November.

    Obama and these socialist revolutionary types do not realize that our country is always in a state of flux politically. We are not some monarchy or dictatorship with a leadership that never changes. As times go by, the problems that Obama inherited from the previous Administration are now his responsibility.

    By 2012 is the economy does not improve, he can no longer blame Bush anymore, it will now be his fault that he did not fix it.

    The biggest issue I have had with the President since day one is not his radical agenda, it is the fact he is just inexperienced. He should have run for Governor of IL first, put in two terms and then ran for President. You can tell for the recent SOTU, speech he is in over his head now. He is too busy reading his “rules for radicals” and wondering why nothing is working.

    He needs to put the Alinsky and Marx down and pick up Sun Tzu, if he wants some real rules for leadership. He won’t because Obama is too busy listening to his advisers and sycophants who are just telling him what he wants to hear.

    Now one year has gone by and Obama may already be a lame duck.

  8. jobeth says:

    “Now one year has gone by and Obama may already be a lame duck. ”

    He knows it.

    “I’d rather be a really good one-term president than a mediocre two-term president,” he told ABC’s “World News” anchor Diane Sawyer in an exclusive interview today


    Obama came into office with such a whirlwind of activity because it was his (and the cabal’s) goal to tie this country up for years in a tangle of huge debt and bad law.

    He is only a ‘useful idiot’ for a progressive left cabal who want this country to fail and fail big.

    Once he has thrown himself on the sword for this cabal he, like Hillary, will be cast aside.

    Obama will be replaced with another as soon as his usefulness wanes. As his actions’ ‘chickens come home to roost’.

    This country is in major trouble and under attack by the progressive left as sure as if they had sent rockets over our head from without.

    The average American can’t see that yet…but will.

    However this country will be so tied up in debt and bad law it will be generations before it can be untangled. Just as planned by the left.

    The goal is to soften us up for a full take over if this cabal has it’s way.

    America is beginning to wake up…but none too soon. With God’s help and the hard work of true Americans we will defeat this bunch. We are a strong minded people. And determined to have our liberty.

    If this wasn’t so serious, it would be fascinating to watch. From an historic point of view, these times will be discussed for generations.

    • tranquil.night says:

      “The goal is to soften us up for a full take over if this cabal has it’s way.”

      Or, if it fails, to weaken us – internationally, domestically, economically – long enough for our historic rivals to ascend the world power ladder and bully us (China); OR long enough for one of our insane historic enemies to strike us and turn order to chaos.

      Either way, financially they profit and politically they’ve saddled a revolution’s worth of bureaucracy onto the American dream.

      “as sure as if they had sent rockets over our head from without”

      Mhm, you got it Jo. I don’t think anybody’s buying the new new new centrist Obama either.

    • proreason says:

      I don’t think there is any intent for Obamy to step aside.

      FDR was elected 4 times. An amendment was passed after that to set the limit at 2 terms, but the Constitution is so so yesterday, that can only be a minor impediment.

      Aside from that, the voting public has long excluded criminals and illegals. Yet they live in the country just as you do. That’s not right. And it is so difficult to vote anyway. Why, you actually have to sign up!! What’s with that? Our dear leader will allow voting on the internet by anybody who has a drivers license, or who says he or she has a driver’s license. Oh sure, there will be a problem here and there, but really, it’s the fair thing to do, isn’t it? And for people who don’t have internet access, or who don’t know how to get on, your trustworthy government and its private partners will be there to help.

      And you can bet there are multiple contingency plans for martial law and multiple variations of it because that word “martial” is so, so, “army”-like. Lawyers are working on those contingencies even today.

      You can already see it playing out. He has already executed an artful head fake after Scott Brown’s election (you could hardly call it a victory when people are simply agreeing with Obamy). Tax cuts for small business, extended unemployment benefits, focus on jobs, BILLIONS cut from the budget, what a fiscal maniac he is……so reasonable, so middle class. Our Leader listens. But the people are disastified with Congress’s extremism, so the president is having to step in and spank the miscreants.

      Rasmussen popped 7 points. We love a president who listens to our concerns. And he certainly has.

      You can’t really blame him for the country’s problems anyway. Bush left him a shell of a nation. Miracles have happened in 1 year, and there are more to come. And all despite the fact that mean old Washington simply won’t listen to the public outcry for Change. Obamy called for Transparency, and look what the miscreants have done!! Why, even the Supreme Court has turned against progress. So now Obamy has had to take out the switch. Despite the awesome toll it takes on the dear man, he isn’t quitting. The entrenched special interests are pernicious, but they can be broken. Thank goodness we have a visionary with the intelligence to make it happen. He just needs a little more power to combat the forces arrayed against him.

    • jobeth says:

      Pro, “I don’t think there is any intent for Obamy to step aside. ”

      Agreed,…but only so long as he is ‘useful’. We both know if he stops being the convincing ‘useful idiot’…he’s gone. It’s just a matter of WHEN that moment hits. I don’t believe there is any loyalty given to Obalmy or anyone by the progressive communist left.

      I believe he is in there now because he was a more “slick and shiny’, ‘likable”, and smooth tongued shill for this group. Hillary was too headstrong…and may…probably would have… gone off on her own agenda. Not to mentions she was beginning to rub too many people the wrong way. Too divisive.

      How could a “nobody’ like Obalmy, de-throne a dynasty like the Clintons without a LOT of back help from the cabal? They threw her over as unceremoniously as throwing out the weekends trash.

      He’s next…when they find a better, more ‘likable’ dupe to fill his slot as his brand tarnishes with more and more people.

      People are just beginning to blame Obama for these policies. He is just beginning to be tainted property. If they can’t clean him up…they will drop him for another fresh piece of meat.

      Hey,you are the one who taught me about the cabal…and I believe every word…:-D

    • proreason says:

      Jobeth, we agree in every significant point.

      But I have slightly changed my view of Obamy because of the events after Scott Brown’s victroy.

      I now think the Moron is leading the show. The reason I think that is because the pivot to the center is pretty weak. It is so obviously lip gloss that I believe the strategy has to be set by idealogues, and I can’t quite see his traditional handlers being that committed to an idealogy. Ultimately yes, but in the short term they have always been imminently practical.

      It makes sense that he would be able to gain the upper hand and push his cabal aside. After all, he does hold the most powerful position in the world. And he does have an ego that knows no bounds. And he does believe he cando no wrong.

      And I’m happy about it. I much prefer to have the Moron making the decisions than a group of people. One person is going to make more mistakes than any group, particularly a cabal that has trillions in assets and think tanks that have been in place for decades if not centuries.

    • jobeth says:

      Pro…Your thoughts are great food for thought…I’m not quite with you yet, but you have a basis for your theory.

      Its all too common for those who reach the top spot to let it go to their head and begin to try to shed those who got them there and ‘go rogue’ to borrow a phrase. History is full of those stories. In fact I think that is why Hillary got dumped. The Clintons let their position get ahead of the ‘machine’s’ goals. They got too independant. And if there is one thing the far left can’t deal with it is independant thinkers…or actors.

      Having said that…I also know that the far left, progressives/communists are quite happy to position them selves for the long term goal. Push out and replace with who ever it takes to get the ultimate goal done. Sometimes that means dumping someone…and sometimes that means going with what they have.

      In Obalmy’s case, it remains to be seen. But as I said earlier, if this wasn’t so very serious, it would be facinating to watch it play out. This stuff will fill the history books…of the right. The left will just change the facts.

      BTW…thanks for your (Pro) thought provoking comments. I have learned so much from you and the other posters here. And I am sure I will continue to learn. Thank YOU Steve for hosting this ‘commoner think tank’. S&L has had a real (and good) impact on us ‘commoners’ as a reliable source for truth and a way to vent our anger and find support for American ideals.

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