People of a certain age remember the Misery Index: It combined the inflation rate with the unemployment rate. Candidate Ronald Reagan used a high of nearly 22 percent in 1980 to highlight the economic failures of Jimmy Carter and win the presidency. Although President Obama’s rate by the old measure is a little more than 10 percent, a shrewd Republican challenger would be working on a new Misery Index.
It will take some work, because it should include the real unemployment rate (16.7 percent) plus several other critical measures: Long-term unemployment, loss of household wealth due to the real-estate crash and damage to average investors’ holdings from the Great Recession; stagnant or falling wages for most working Americans; the percentage of the population on food stamps, poverty rate, etc. A big part of this yardstick would be capturing the de-facto deflation that has hurt millions of households. Together, it would be a staggering number.
Today’s national unemployment report is dreadful: 18,000 jobs created in June, 250,000 more people dropped out of the labor force and average hours declined. Only 25 percent of American teenagers have summer jobs, the lowest rate on record. May’s data were revised downward, meaning two straight months of less than 25,000 net new jobs. At 58.2 percent, the employment-to-population ratio matched its lowest point in the downturn. As economist Heidi Shierholz of the Economic Policy Institute put it, “Virtually every single measure was devastatingly weak.”
This is the “new normal”? Gah! Meanwhile, in the Other Washington, Republicans that have taken control of the House of Representatives have, ironically, repeated the president’s chief mistake. Mr. Obama wasted a year and most of his political capital on a highly complex health-care overhaul. It’s a windfall for the insurance industry, doesn’t provide universal coverage (“socialism”) and most Americans don’t understand it. He should have been focused on jobs, putting forward a large, jobs-focused stimulus. Speaker Boehner has been trying to keep his insurgents happy, putting forward slash-and-burn cuts that will only cause further economic damage, and with the debt-ceiling standoff making the world think we’re deeply unserious about the full faith and credit of the federal government. He should have been focused on jobs.
Funny how things work out. Only nobody’s laughing, save the moneyed elites that fly above it all.
Links of the Week:
- Rewriting the history of the financial crisis: Reckless endangerment of the truth || Economist’s View
- Trickle down fail, the final nail in the supply-side coffin || Salon
- BMW layoffs exemplify the evisceration of the middle class || LA Times
- Obama’s mistake: A too-small stimulus || The Economist
- Only further stimulus can tackle America’s jobless recovery || Financial Times
- Bruce Bartlett: Five myths about the debt ceiling || Washington Post
- Simon Johnson: Will the United States default? || NYT Economix
Today’s Econ Haiku:
Airbus comes on strong
Its big orders leave Brand X
Down on the tarmac