The Democrats have painted themselves into a corner

New unemployment numbers are out for December 2009 and it does not look good for the Democrats.

Nonfarm payroll employment edged down (-85,000) in December, and the unemployment rate was unchanged at 10.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment fell in construction, manufacturing, and wholesale trade, while temporary help services and health care added jobs .

Still losing jobs. But here is the kicker. Just to stay even at 10% unemployment, the economy must grow and add 90,000 to 150,000 jobs per MONTH! This just to absorb new people entering the job market. The number depends on who you read. And the 10% doesn’t count the number working below their skill set or who have just given up on finding work.

Now look at this graph from Calculated Risk for December 2009. The vertical line is the percentage change from the onset of the employment recession. For the current plot, employment peaked in December of 2007 and is month zero. That is why the curve isn’t at 10%. It is using a larger number in the denominator. The denominator is static – meaning that it does not increase as new job seekers enter the job market. This plot attempts to show when jobs recover to the level BEFORE job losses started. It is unlikely people will feel better off until the curve gets back to zero. If this seems confusing, then just look at the shape and trend of the lines. The bottom axis is the number of months since the onset of employment recession (Dec 2007 currently). Now look at the big red line marked Current Employment Recession – red line .

July and August are just a few months away – months 31 and 32. Looking at the shape of the line, it is hard to believe it will be much above 5% as it has not yet turned up. This means the unemployment rate will be a lot closer to 10% than 8% come July-August. Why is this important? Many people determine how they will vote on pocket book issues BEFORE school starts! Not only that, it is likely that even by November, when people go to the polls, the unemployment will STILL be closer to 10% than 8%. Seven million jobs have been lost and there is little the President or the Democrat controlled Congress can do to significantly change the numbers in the next six months.

Just contrast the current line with 1980, 1981 and 2001. In 80 and 81, Paul Volcker raised interest rates to kill inflation, which caused more unemployment than he expected, while Reagan cut taxes to stimulate growth. Between the two of them, they ended stagflation. Unemployment peaked at 10.8% in 1982. By 1984, Reagan swept 49 of 50 states only losing Minnesota by 5000 votes. The 2001 line is largely due to the 9/11 attacks and, at least partially, reflects the effect of uncertainty. Everyone was expecting another attack. It is UNCERTAINTY that has the current economy stuck. Some would say, “Stuck on Stupid”.

But not to worry. The President and the Democrat controlled Congress will make 2010 the year of jobs and fiscal responsibility. Sorry guys and gals, it is too late. You loose! If the Republicans had a lick of sense, they could sweep the house. Unfortunately, they are stuck on Democrat lite and haven’t learned their lesson from 2006 and 2008. That’s okay, because we can work to get fiscal conservatives elected in both parties who will be true to the principles upon which our founding fathers based our republic.

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