Tuesday, 11 June 2013

Self-proclaimed Economic Wizards

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With the U.S. economy in its slowest job-market recovery since World War II and still 2.6 million jobs short from its payroll peak in January 2008, it's good to hear there's finally someone in the Obama administration who says he knows how to jump-start an economy.

On May 26, Secretary of State John Kerry announced at the World Economic Forum in Jordan that he's been working with former British Prime Minister Tony Blair on a “transformative” economic plan that could grow the Palestinian economy by an astounding 50 percent in three years.

Kerry said his economic plan, “different than anything we've done before,” could well deliver nothing short of a high-speed economic miracle.

In this extraordinary turnaround, asserted Kerry, Palestinian unemployment could be cut by two-thirds, agricultural output could double or triple, peace could break out and cause tourism to triple, 100,000 new “energy efficient” houses could be built, and the median annual wage of Palestinians could jump by as much as 40 percent.

But as Time magazine reported, “There were few specific details offered.”

Well, I have an idea. If Kerry is all that skilled in economic wizardry, with a “transformative” economic plan that will multiply production in one of the most dysfunctional regions of the world, I think he should cut the globe-trotting and hustle back to the Oval Office to divulge his magic formula to President Obama and the Council of Economic Advisers.

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The April 2013 report from the Labor Department's Bureau of Labor Statistics showed the U.S. unemployment rate was “little changed” at 7.5 percent, putting the official number of unemployed persons at 11.7 million, not counting the millions of labor force dropouts.

The May 2013 report from the Bureau of Labor Statistics also showed that “little changed,” with the official unemployment rate increasing to 7.6 percent.

The 7.6 percent unemployment rate nearly doubles to 13.8 percent under the Labor Department’s broader definition of joblessness that includes those who are involuntarily working part time because they can’t find full-time work and those who are unemployed but have given up looking for work.

In May, employers added 175,000 jobs while the labor force expanded by 420,000, with 182,000 of the 420,000 workers rejoining the labor force even though they didn’t have jobs.

“From the start of the recession in December 2007 to well past its end in March 2013, more than 10 million Americans left the labor force, meaning they stopped working or looking for work,” reported Ben Casselman at the Wall Street Journal in June. “As a share of the population, the labor force in March was the smallest in more than 30 years.”

Specifically, among major groups, the Labor Department reported that the unemployment rate in April for teenagers, blacks, and Hispanics, respectively, was 24.1 percent, 13.2 percent, and 9.0 percent.

Also in April, “the number of involuntary part-time workers increased by 278,000 to 7.9 million,” reported the Labor Department, while “2.3 million persons were marginally attached to the labor force.”

These “marginally attached” workers “were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months” reported the Labor Department, but they “were not counted as unemployed because they had not searched for work in the four weeks preceding the survey.”

Sounding not unlike Kerry in Jordan, candidate Obama delivered a “transformative” declaration at a campaign rally on October 30, 2008: “We are five days away from fundamentally transforming the United States of America.”

Since then, the national debt has grown by a record $6.2 trillion and the Census Bureau reports that 50 million Americans — one in six — are now living in poverty.

Ralph R. Reiland is an associate professor of economics and the B. Kenneth Simon professor of free enterprise at Robert Morris University in Pittsburgh.