The Obama administration is overwhelmed by crises and? scandals. Almost overlooked amid the myriad foreign policy and political messes is the president's abject failure at his oft-proclaimed top priority: economic recovery.
The U.S. economy shrank by 1 percent in 2014's first quarter. The bitter winter may help explain that contraction, but it does not explain the bigger economic malaise in which America is mired.
The Pew Research Center recently stated, "By several measures -- gross domestic product, personal income, job growth and employment ratio — the current recovery is among the weakest on record, particularly given its duration. … By almost every measure, the current recovery has lagged well behind those of the past."
According to a recent New York Times article, "economic growth has averaged only about 2 percent a year, well below its historical average," and "household incomes continue to stagnate, and millions of Americans still can't find jobs."
The Federal Reserve Board lowered its projection for economic growth this year to 2.1 percent to 2.3 percent, down from a March forecast of 2.8 percent to 3.0 percent. The Congressional Budget Office recently revised its longer term estimates of economic growth downward, too.
According to its recent Budget and Economic Outlook report, "Beyond 2017, CBO expects that economic growth will diminish to a pace that is well below the average seen over the past several decades." The Washington Post summarized the CBO report this way: "The U.S. economy is in worse shape than forecasters previously thought."
Government "outlays will grow faster than the economy during the next decade and will equal 22.4 percent of GDP in 2024," CBO says. "With no changes in the applicable laws, spending for Social Security, Medicare (including offsetting receipts), Medicaid, the Children's Health Insurance Program, and subsidies for health insurance purchased through exchanges will rise from 9.7 percent of GDP in 2014 to 11.7 percent in 2024."
CBO says that federal government interest payments are also projected to grow rapidly. Together, these increases will continue to cannibalize other government spending – "for defense, benefit programs other than those mentioned above, and all other nondefense activities" – which is projected to drop from 9.4 percent of GDP this year to 7.3 percent in 2024 under current law." All this means higher deficits than previously expected.
Pew also notes that, "The share of adults who actually have jobs (58.9 percent) is still well below its pre-recession level (62.7 percent)." In the U. S., as in Kentucky, a significantly lower percentage of the population is employed now than when the recession began.
At 62.8 percent, the labor force participation rate (the percentage of U.S. civilians 16 or older with a job or actively seeking one) is at a 36-year low and is, according to The Washington Post, "trending downward." Not since the bleak days of the Jimmy Carter administration has so small a share of Americans been working or looking for work.
Declining labor force participation "bodes ill for two reasons," the Post explains. First, "The economy's capacity for growth depends on robust use of all available factors of production, the minds and hands of U.S. workers very much included." Second, "Declining labor-force participation implies a rising ‘dependency ratio' of workers to recipients of social assistance."
Indeed, last month saw the number of people on disability surpass 11 million for the first time in U. S. history. The number on food stamps is declining, but according to CBS "still stands near peak numbers, with 46.2 million Americans receiving the food aid in February."
For those who do work, the Wall Street Journal recently reported that, "Growth in wage and salary income slowed to just 0.2% in April from the prior month, marking the weakest monthly increase of the year.” The Journal noted, too, that U.S. consumer spending also declined in April "for the first time in a year even while inflation crept up."
USA Today recently reported that, "Consumer prices last month posted their sharpest increase in 15 months as inflation continued a recent acceleration from unusually low levels." The spike was broad-based, the paper said, with food up 0.5% (the largest increase since August 2011), gasoline up 0.7%, electricity up costs increasing 2.3%, airline fares up 5.8% (the largest increase in 15 years), apparel prices and housing costs up 0.3%, prescription drugs up 0.7%, and an index of medical care costs up 0.3%.
Some inflation is not necessarily a bad thing, but those on fixed incomes and facing stagnant wages will nonetheless feel a pinch. Too much inflation, as some fear from the Federal Reserve's long policy of monetary stimulus, would be disastrous.
In a recent Wall Street Journal/NBC News poll, only 41 percent approved of Obama's handling of the economy. Even worse, 54 percent said they no longer feel that Obama "is able to lead the country and get the job done." On competency, Obama scored lower than George W. Bush did in 2006 after the worst of Iraq and Hurricane Katrina.
Four years ago this month Obama launched the public relations farce he called Recovery Summer. This summer, the public has lost confidence in his leadership on the economy and almost everything else. Call it Reality Summer. Too bad it took so long in coming. Too bad it will take so long to change.
John David Dyche is a Louisville attorney and a political commentator for WDRB.com. His e-mail is email@example.com. Follow him on Twitter @jddyche.