by Damozel | The US Department of Labor has issued a report. As Fester says at Newshoggers, the numbers are ugly. According to The New York Times:
The unemployment rate jumped to 6.1 percent in August, its highest level in five years, pushing the job troubles of American workers onto the political stage as the presidential campaign enters its final eight weeks. (NYT)
And as you read further, it just gets worse. This is where Obama really needs to sail in and point compellingly at where eight years of Republican policies have left ordinary American citizens.
ISIAs Grynbaum discreetly phrases it, "The bleak data, which came as the two presidential candidates began a two-month sprint to Election Day, clearly raised the challenge facing Senator John McCain, the Republican candidate."(NYT) That's right, because:
So far, 605,000 jobs have disappeared since the start of the year, with employers slashing 84,000 jobs in August alone, the Labor Department reported on Friday. And even Americans who are still employed are facing tough times.
Raises have not kept up with the rising cost of living, putting more pressure on workers as high gasoline and food prices curtail their spending power.(NYT)
At MSNBC, John Schoen sort of suggests that this news took the forecasters of impending doom by surprise. (MSNBC) It did? It didn't surprise me. All I have to do is look around at what's going on right in front of my face. People do tend to notice policy when its consequences affect them directly.
People know all too well what is happening in their own lives. These private travails need to be made the stuff of politics once again. All of these misfortunes are the result of thirty years of conservative ideology, which had its way with the American economy. What more proof do we need that rightwing policies promoting the rapacious genius of free markets yield practical failure for most ordinary people? (Robert Kuttner)
So is it a recession yet? Is it?
The unemployment rate, which rose from 5.7 percent in July and from 5 percent in April, is at its highest level since September 2003. While teenagers accounted for most of the earlier increase, the job losers in August were mostly over 25 and college educated as well as high school graduates.
“These numbers just cry out to me that the job market is in a recession,” Stuart Hoffman, the chief economist of PNC Bank, said. (NYT).
From PGL at economics blog Angry Bear:
This 62.1 percent employment-population ratio for August compares to a 62.4 percent ratio for July and explains the jump in the unemployment rate since the labor force participation rate was unchanged. It also represents the lowest level since September 2003.
Even before this bad news, David Altig was presenting employment data that would suggest we are in a recession. As Spencer notes – Team McCain is shying away from this issue.
Spencer at Angry Bear says:
Every time employment has fallen below its year ago level the US has experienced a recession and both employment measures are below their year ago level. Neither measure is showing any sign of bottoming....
Every time employment has fallen below its year ago level the US has experienced a recession and both employment measures are below their year ago level. Neither measure is showing any sign of bottoming....
Interestingly, the Republican convention clearly read the mood of the country and they decided to campaign against the Republican party.
::sound of hollow laughter::
Robert Kuttner, author of The Squandering of America, addresses this misleading attempt by McCain to differentiate his policies from Bush's:
In his acceptance speech, McCain went out of his way to emphasize his independence from the wretchedly failed administration of George W. Bush. But his differences on the key pocketbook issues that should be front and center in the campaign are...exactly what?
Here's what: If anything, McCain will double down on Bush's policies--even more tax cutting; even more slashing of social spending; even more license for speculators to take down the whole economy. Even more coziness with big oil. Despite the rhetoric of independence, the program was the same-old same-old--on Alaska-scale steroids.
What does it offer the average citizen? If your job doesn't pay a living wage, or if it is at risk of being outsourced, or if the price of college is exorbitant debt, or you are locked in because of health insurance concerns, if good housing is unaffordable, then a tax cut of another few dollars and offshore drilling that yields some oil in 2023 doesn't exactly solve your problems.
At American Prospect [h/t Angry Bear] Dean Baker wrote scathingly about McCain's misrepresentations:
Senator McCain claimed that Obama's proposal would force people into a health care plan run by government bureaucrats. This is not true. Senator Obama's plan would give people the option of buying into a publicly run Medicare-type plan, but this would only be an option. Under Senator Obama's plan, no one would be forced to join the public plan, they would be free to stay with their current plan if they chose.
Senator McCain also misrepresented his plan on taxes for ordinary people. He claimed that he would not raise taxes, but his health care plan would raise taxes for tens of millions of middle income workers. McCain proposes making employer payments for health care taxable income. This will be a substantial tax increase for many workers. It also would have been appropriate to note this misrepresentation since Senator McCain has made low taxes so central to his campaign....
It is worth noting that most...news accounts seem to have ignored Senator McCain's misrepresentation of Obama's position on this important issue.
PGL at Angry Bear also calls out John McCain on the lies he told in his speech about the effects of Obama's policies.
Will the Obama campaign also call them out?
John Schoen at MSNBC says:
The economy already was the No. 1 issue for voters, but the increase in the psychologically important jobless rate ensures both Sens. John McCain and Barack Obama will have to continue to address the nation's economic troubles as they stump for votes over the next two months.
I'd say [basil fawlty voice/] "Thanks for the bleeding obvious [/basil fawlty voice], except it doesn't seem to be all that obvious to either of the candidates. Even national security fears aren't all that compelling to people who are wondering whether they're going to be able to keep a roof over their heads.
And they should be wondering, it seems. Because while you were watching the campaign, foreclosures and delinquencies were reaching record highs.
The rise in foreclosures wasn't unexpected, since there are widespread, albeit anecdotal reports of banks being backlogged on foreclosures, either by virtue of design or understaffing. But notice how prime mortgages are a significant component of new foreclosures. (Naked Capitalism; more)
Via Naked Capitalism, this piece by Kathleen Howley at Bloomberg:
Foreclosures accelerated to the fastest pace in almost three decades during the second quarter as interest rates increased and home values fell, prompting more Americans to walk away from homes they couldn't refinance or sell.
...The total inventory of homes in foreclosure reached 2.75 percent, almost tripling since the five-year housing boom ended in 2005. The share of loans with one or more payments overdue rose to a seasonally adjusted 6.41 percent of all mortgages, an all-time high, from 6.35 percent in the first quarter.
Tumbling home prices are making it difficult for even the most creditworthy owners with adjustable-rate mortgages to sell or get a new loan as their financing costs rise, said Jay Brinkmann, MBA's chief economist. Prime ARMs accounted for 23 percent of new foreclosures and subprime ARMs were 36 percent, he said.
The situation may be partly due, as some economists have said, to bad standards for underwriting. (Reuters) Whatever the contributing factors, I doubt that the voters who have walked away from their homes or who are desperately hoping to hang on to them, are going to care much.
Obama, unlike John Kerry in 2004, has plenty of evidence of the effects of Republican policy. As The Wonk Room, reflecting on the reported increase in unemployment, puts it:
While productivity is up 4.3% since last year (people are working harder with better, more efficient technology), real wages have sagged, dropping .4%.
These numbers are a continuation of trends resulting from the policies of George W. Bush: when times are good, they’re only good for corporations and the wealthy, and when times are bad, they’re mostly bad for the middle class. [emphasis added]
Obama needs to hammer this home.
Or as Kuttner puts it, "Memo to the Obama campaign: Connect These Dots."
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