The Obama Administration is hanging its hopes on consumer spending, which makes up about 70 percent of economic activity, and the approximately $2 trillion in assets the industrial community has been sitting on. But despite recent stronger economic growth, Fed Chairman Ben Bernanke forecasts as much as five more years of high unemployment.
The dismal outlook for continuing joblessness and its political danger is really nothing new. On Sept. 11, 2009, then-National Economic Council Director Larry Summers said the nation’s unemployment rate could stay “unacceptably high for a number of years.” With his remarks about sustained high unemployment, Summers spoke of it as one of the most sensitive issues in the economy, as Politico wrote, covering the summers briefing. Summers also said that if the unemployment rate begins to decline, the White House may have an easier time “convincing voters” that the Administration’s enormous stimulus spending and vast federal intervention in the economy were effective. If, however, all the Administration’s pervasive economic encroachments didn’t move the needle on the employment rate, Summers said, it could hamper the President’s party.
Earlier that same week, the White House said its research indicated the $787 billion economic stimulus bill passed earlier in that year saved or created one million jobs. That’s on pace to hit the President’s goal to save or create 3.5 million jobs by the time the programs ends in 2010, White House officials said. All so wrong.
A glimmer of hope came when the Bureau of Labor Statistics reported Jan. 7 that the unemployment rate fell to 9.4 percent from 9.8 percent in December. The number of jobless dropped by 556,000 to 14.5 million.
Those in the Obama voter base still lag far behind other unemployed. Some 16.8 percent of blacks are jobless. And 13 percent of Hispanics are not working. Americans who have been unemployed for 27 weeks or more total 6.4 million. Government workers (federal, state and local) fared much better. Their unemployment rate was only 4.4 percent for 2010 and left only 958,000 jobless, BLS statistics state.
Following the disappointing job creation report, investor confidence fell significantly, according to the Rasmussen Reports polling. Economic confidence of consumers fell seven points. Investor indexes fell even more sharply—by 14 points. While 33 percent of consumers think the economy is getting better, 43 believe it is getting worse.