Wednesday, June 27, 2012

Obama's Reality Gap on the Economy

While Barack Obama continues to campaign around the country, claiming that “the private sector is doing fine” and that his policies are working, more and more worrisome new data continues to raise red flags for the economy.

President Obama’s Secretary of Agriculture, Tom Vilsack, once again visits Ohio this week. Last week while on the campaign trail on behalf of the Obama campaign, the Secretary seemed to echo Obama's cluelessness and said that the economy has “obviously turned the corner.” One glance at recent headlines may cause him to change his tune. We may be headed for a double-dip recession.

On Thursday, the labor department released the latest round of unemployment data, this time highlighting the number of Americans applying for jobless benefits. As Bloomberg reports,
More Americans than forecast filed applications for unemployment benefits last week, indicating the labor market continues to struggle. . . . The four-week average, a less volatile measure, climbed to the highest of the year.

The level of dismissals may raise concern the slowdown in payrolls reported in the past few months will be prolonged, limiting consumer spending.
Troubling indeed, especially given recent news regarding the manufacturing sector of the American economy, one of the few bright spots in the recession. Reuters reports:
U.S manufacturing grew in June at its slowest pace in 11 months and hiring in the sector slowed as overseas demand for U.S. products waned, an industry survey showed on Thursday. . . .

For the second straight month, weaker demand from Europe and large emerging markets such as China dented sales. Markit said U.S. manufacturers reported the second largest decline in new export orders since September 2009. The index's new orders component fell to 54.1 from 54.6. Manufacturing has been one of the strongest links in an otherwise frail U.S. economic recovery, but Markit said weaker overseas demand may be starting to slow hiring in the sector.
…and Ohio’s own Middletown Journal:
“Approximately 2.6 million people earned bachelor’s, master’s or doctoral degrees this spring. Unemployment among college graduates younger than 25 nationwide averaged 9.4 percent in 2011 with an additional 19.1 percent of graduates ‘underemployed’ or earning less than they need to in order to live, according to the Economic Policy Institute. According to the Ohio Department of Jobs and Family services, in 2011 the percentage of the population that was unemployed was directly inverted to the age group being measured. Sixteen-to-19-year-olds had a 19.5 percent unemployment rate. Twenty-to-24 year olds, the age range in which most college graduates fall, had an 11.9 percent unemployment rate.”
These latest pieces of bad news serve to reinforce a disturbing trend. As the economy continues to slide back towards recession, Barack Obama and his administration insist that we are "doing fine" and that's "it's obvious" that we've turned the corner. No wonder he is dropping in the polls again, as he seems more and more out of touch with the reality on the ground for so many Americans.

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