OPINION:
When millions of voters went to the polls in November to narrowly re-elect Barack Obama, the economy was rapidly shrinking toward recessionary levels.
In the last three months of 2012, the gross domestic product — the measurement of everything America produces — fell to an annualized rate of 0.1 percent, the Commerce Department reported Wednesday. This means the economy grew at a weak 2.2 percent rate for the entire year, little better than its feeble 1.8 percent growth rate the year before.
The Wall Street Journal, never mincing words, said, “U.S. economic momentum screeched to a halt.”
Apparently, millions of voters didn’t know it or chose to ignore the handwriting on the wall that was there for all to see. In his campaign, President Obama insisted that the economy was “moving forward,” that “we’re making progress,” and that the nation’s economy was in recovery. His top advisers repeated the claim, as did his cheerleaders in the news media.
Millions of voters believed him. After all, there were few stories on the network nightly news shows about the nation’s still severely high unemployment. Newspapers often referred to “the recovery,” played up every downward tick in the jobless rate, even when the decline was largely because of long-discouraged job seekers dropping out of the labor force. More than 12 million Americans were officially out of work, and more than half of the jobs being created were low-wage ones or only part-time.
Numerous business and independent economists were warning at the time that the Obama economy was slowing and were rapidly revising their fourth-quarter growth rates to little more than 1 percent. Their estimates, however, apparently fell on deaf ears.
Still, the Washington news media continued to cover for Mr. Obama, whose four-year “economic recovery” record is the worst since the Great Depression.
The day before Wednesday’s bleak report that the once-mighty American economy was no longer growing, The Washington Post ran a story grudgingly acknowledging that the economy had “slowed” but was still in “a solid recovery.”
Twenty-four hours later, in its lead, front-page story on the government’s dreary GDP numbers, the newspaper retreated a bit, saying it now looks like “a modest recovery.”
Excuse me? The economy is creating a relatively small number of jobs each month (only 155,000 in December), nowhere near the 358,000 a month needed to pound the unemployment rate down to 6 percent.
Declining U.S. exports plunged by $27 billion, or nearly 6 percent in the last quarter. The richest economy in the world is selling less abroad for a number of reasons, but the biggest obstacle is Mr. Obama’s job-killing resistance to new trade-expansion agreements.
Businesses, too, were slashing inventories by $40 billion amid growing signs of a precipitous slowdown, adding new downward pressure on future orders that were reflected in declining fourth-quarter final sales.
Capital spending was already falling in the third quarter, the first decline in more than three years.
Let’s not forget that as Mr. Obama enters his fifth year in office, many states are still suffering from recession-leaning unemployment levels: California, the most populous state in the country, 9.8 percent; Florida, 8 percent; Georgia, 8.6 percent; Illinois, 8.7 percent; Nevada, 10.2 percent; North Carolina, 9.2 percent; South Carolina, 8.4 percent. Does this sound like “a solid recovery”?
People who are unemployed or underemployed mean less consumer spending and lower revenues that drive up federal budget deficits. That’s not going to change anytime soon.
“The number of unemployed persons, at 12.2 million, was little changed in December,” the U.S. Bureau of Labor Statistics reported Jan. 4.
Labor force participation, however, is much lower today than when Mr. Obama took office, a major factor in the economy’s underlying weakness, says University of Maryland business economist Peter Morici. Factor in “discouraged adults and others working part-time that would prefer full-time work, the unemployment rate is 14.4 percent,” Mr. Morici says.
The White House and its allies blamed the economy’s sharp decline on the looming budget cuts, but there is a lot of smoke and mirrors behind that excuse. The big cuts are yet to come, if Congress does not avert the budget-cutting sequester before March 1.
Defense industries have been cutting jobs, largely in anticipation of Pentagon cutbacks, but a spurt in higher defense spending in the third quarter pushed GDP to more than 3 percent. Of course, that level of spending was, in the final analysis, unsustainable.
We can’t spend our way into prosperity, though that has been Mr. Obama’s core stimulus policy prescription throughout his presidency and it has pushed us to the brink of another recession — or the likelihood of four more years of subpar growth, high unemployment and an economy in decline.
“The economy has less momentum going into 2013 than initially thought, making it vulnerable to external shocks,” warns Stuart Hoffman, chief economist at PNC Financial Services Group.
The worst is yet to come. The “fiscal cliff” deal that Mr. Obama signed into law last month, pushing the top income tax rates to Clinton-era levels and raising the tax on capital gains and dividends, will further weaken the economy.
The 2 percentage-point payroll tax cut was rescinded, taking a bigger bite out of every worker’s paycheck at a time when the economy is still in a nosedive.
Nevertheless, Obama apologists are denying that the economy is in bad shape, characterizing the fourth-quarter GDP rate as an anomaly. “I don’t think anything has fundamentally changed in the economy,” said Mark Zandi, chief economist at Moody’s Analytics.
“NBC Nightly News” with Brian Williams chose to ignore the story altogether Wednesday night, deciding this was of no interest to the American people. A half-hour in an unemployment line might change Mr. Williams’ mind.
Donald Lambro is a syndicated columnist and former chief political correspondent for The Washington Times.
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