Kevin Hassett, Senior Fellow and Director of Economic Policy Studies at American Enterprise Institute:
"President Obama of course asserted somewhat infamously now that the private economy is 'doing fine' and then subsequently backtracked from that. I think that one reason why the remarks have received so much attention is they kind of reveal, if you look around the remarks, the president's real obsession with the idea that the way to improve the economy is to increase the size of the government and increase government employment. And even though he's been back tracking from the remarks, I think that the president's team is still guilty of abusing the data a little bit. And the purpose of this call is to look at the facts as to how the economy is doing and to look at even the facts in the jobs report and put them in some kind of historical context and to do so in a way that is clear enough so you can see the little trick they are playing, even though they are backing away from the 'doing fine' remarks to try and defend it with misleading statistics.
"The top line facts are well known to everybody, unemployment is at 8.2 percent there are 23-ish million Americans unemployed or underemployed. About 50 percent of recent graduates can't find a job or have had to accept a job that's far below what they are qualified for. New business start-ups are at a 30 year low and so on. And if you look at the recovery, the top line data is very consistent with the picture that describes. So for example the real GDP growth in the eleven quarters following the recession in this recovery is only about 2.4 percent that's significantly below the second worst recovery ever in 2001 which was 2.9 percent and far, far below the average through this point in the cycle at 4.6 percent going back to the Second World War.
"Now, in trying to defend the position that the private sector is doing just fine, the Obama administration has been using the cycle low of February 2010 as their starting point to sort of make the assertion that the private sector is creating all sorts of jobs. Now normally, I've been doing business cycle analysis since I was in graduate school...If you look at how we think about recoveries, generally people will score the recovery either from the peak, which is something that makes intuitive sense...Or sometimes people will measure things from the end of the recession and the end of the recession could be a metric, especially if you are talking specifically about the recovery...But what the president's team has been doing, they have been talking about statistics from the low of employment. Now the reason that is an interesting choice is that the low happened in February 2010 and so after the recession ended in June '09 jobs continued to decline, the nation continued to shed jobs and it did so for a long time while President Obama was in the White House. And so picking the low is basically asking us to ignore everything that happened before the low.
"But I think that the real interesting thing is that if you measure the recovery in terms of private sector employment from the peak, well we are down four percent down from the peak.. That four percent decline relative to peak is the worst recovery ever, the second worst was the '01 recovery again where jobs were basically flat at this point and of course the typical experience with the numbers was probably five or six percent above that. Measured from the end of the recession we're up 2.9 percent, but measured from the low we are up four percent. Now measured from the low, we are actually the second worst recovery, the one from 2001 is the worst but the difference is only 3.9 versus 4 and the interesting thing is that even if you take the somewhat deceptive read on the data and measure everything from the low then the odds are that unless in the next employment report the private sector creates 240,000 jobs than even by the Obama team's own metric it'll be the worst recovery ever.
"So, I think that it's very unfortunate, especially with Europe starting to look very threatening, try to not be attuned to the idea that the economy is really in rough shape, that this is the worst recovery that has really happened in our lifetime and that the private sector has also suffered. To put the private sector recovery in perspective, if we had had the same kind of recovery after the last really, really deep recession in Ronald Reagan's term than the jobs gap compared to Reagan is around seven million jobs and I think that given that the population's growing it's an even more chilling statistic..."
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