Wednesday, October 6, 2010


Update, Thursday October 7, Reuters is reporting:
The Labor Department on Friday will give an initial estimate of how far off its count of employment may have been in the 12 months through March. The government admitted earlier this year that its count through March 2009 had overstated employment by 902,000 jobs.

Imagine that - which means the unemployment rate is greater for March 2009 - March 2010 than that which is shown above!  But working with the Labor Statistics that are available now, it is hard to look at Chart #1 without the thought going through your mind that business was frightened by the election of Obama.  When both Clinton and Bush II were elected after October 1992 and 2000 respectively, the unemployment rate rose exactly 1.1% by the time each was inaugurated, which is a normal rise between October of each year and January (see Chart #2 below).  But something different happened when Obama was elected - the unemployment rate rose 1.3% more than the normal rise compared to Clinton or Bush II during this time period – I have come to believe this is the Obama Factor.
There were small businesses all over reducing their staff after his election in November.  When Joe the Plumber’s question exposed Obama’s plan to raise taxes on those making over $250,000 – he put all small businesses on notice.   In a normal election, this should have put all employees of businesses on notice too, but this was no normal election.  The kool-aid had already been drunk and it was too late.

Other Democrats also rode the coat tails of Obama into office during the election of 2008 which gave them the 60 votes needed to pass anything in the Senate – with the opposition unable to stop anything the President or congress wanted.  Like the economic stimulus package of February 2009.  This was the beginning of the destructive policies which drove the unemployment rate above the 8% mark.

I believe the Obama administration was counting on the normal downturn of unemployment after each President has taken office and thus the statement that the unemployment rate wouldn’t go over 8% if the stimulus was passed immediately.  However, they hadn’t figured in the Obama Factor.  Therefore, Obama had to begin stating that the economic mess he inherited was much worse than they anticipated before the stimulus. 

Today – almost two years later - the accusation that Bush created this mess over 8 years doesn’t bear merit.  The unemployment rate was low during Bush’s entire presidency - the highest being in January 2003 at 6.5%.  It fell to 4.1% in October of 2006 and a war weary electorate voted the Democrats control of congress again after 12 years of prosperity under a Republican congress.

If Obama can say he has saved 300,000 jobs, perhaps I can equally say we wouldn’t have such high unemployment if he had not been elected.  Who’s to say the unemployment rate would not have just dropped back down like normal if he had not been elected?  If the Republicans take back Congress in 2010, the unemployment rate should fall (as shown in Chart #1), just as in 2004 when Republicans took over Congress when Clinton was President.  However, we will still have the Obama factor....

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