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February’s 227,000 net new jobs — the third month in a row of job gains well in excess of 200,000 — is good news for President Obama and bad news for Mitt Romney.

Jobs are coming back fast enough to blunt Republican attacks against Obama on the economy and to rob Romney of the issue he’d prefer to be talking about in his primary battle against social conservatives in the GOP.

But jobs aren’t coming back fast enough to significantly reduce the nation’s backlog of 10 million jobs. That backlog consists of 5.3 million lost during the recession and another 4.7 million that needed to have been added just to keep up with the growth of the working-age population since the recession began.

If the American economy continues to produce jobs at the good rate it’s maintained over the last three months — averaging 245,000 per month — the backlog won’t be whittled down for another five years, long after Barack Obama finishes his second term if voters grant him another.

But whether even that good rate continues depends largely on whether consumer demand can be revived. Spending by American consumers is 70 percent of U.S. economic activity. But so far, spending is anemic.

American consumers have replaced worn-out cars and appliances, but little else. They haven’t had the dough. Their wages are still falling, adjusted for inflation. The value of their homes – most consumers’ single biggest asset — continues to drop.

Home values are down by an average of a third from their 2006 peak. Consumers understandably feel far poorer as a result. Declining home prices also mean consumers can’t use their homes as collateral for new loans, as they did before 2008. And even with low interest rates, refinancing is difficult.

Corporate profits are up but the money isn’t flowing to American workers. The ratio of profits to wages is the highest on record — since the government began keeping track in 1947. Not only has the median wage continued to drop, adjusted for inflation, but a far smaller share of working-age Americans is now employed (58.6 percent) than was employed five years ago (63.3 percent). Today’s employment-to-population ratio isn’t much higher than it was at its lowest point last summer, when it dropped to 58.2 percent. (more…)

As others have noted, conservatives who’d like bash the president on the economy are having an awfully hard time right now, as the recovery proceeds apace. Too slowly apace, for sure, but no objective observer can miss that the trend is our friend and that even the job market, while still far too weak and with conspicuous downsides (intractable long-term unemployment), is improving.

So, they’re stuck with “yeah, things are getting better, but if we were in charge, they’d be even better!”

This, of course, is the flip side of a rap with which I’m intimately familiar: “sure, things are bad — but without our actions, they’d be even worse!”

Neither are convincing to most people, because most people don’t engage in the economist’s counterfactual: the path the economy would have taken absent your interventions. It’s the “compared-to-what” in the above statements.

Thing is, I know and believe, within confidence intervals, my counterfactual. It comes from tried and true modeling based on the historical relationships of how advanced economies respond to stimulus.

Or, if you don’t like that sort of thing, you can derive a counterfactual from simply projecting the course the economy was on before you did your policy thing, and compare that to the actual path of growth and jobs (you can see that approach here — see discussion around Table 3). [Note: the fresh-water economists, who continue to willfully ignore critical lessons of our past, deeply disdain the Keynesian multiplier models -- but I haven't heard their objections to this other, much less theoretical approach, as in Table 3 in the above doc.] (more…)

President Obama is exceptionally lucky when it comes to the weaknesses of the Republican field and its stunning penchant for mutually assured destruction. Who would have expected, for instance, that Newt Gingrich’s billionaire-backed super-PAC, aiming to destroy front-runner Mitt Romney, would produce a documentary advertisement on private equity slightly to the left of what we might have expected of Michael Moore? Or that Gingrich, reprimanded by leading free-market ideologues, would then request that the ad be pulled? In this hilariously bungled caper, Marx meets the Marx Brothers.

But it remains to be seen whether Obama will be as lucky when it comes to the shape of the economy as the election year unfolds. Some of what will occur this year is partly within the president’s control; much is not.

Consider the several vulnerabilities of the still fragile recovery:

The Jobs Mirage. Democrats were cheered and Republicans caught off guard when the Labor Department’s December jobs numbers showed a net increase of 200,000 jobs — a nice improvement over previous months. However, a closer look showed that some 42,000 of these were seasonal courier jobs — all the people hired to deliver holiday gifts purchased via Amazon and other online vendors.

Jared Bernstein, the former senior Administration economic advisor now at the Center on Budget and Policy Priorities, calculates that the 200,000 jobs number should be deflated by about 30,000. This brings it closer in line with other recent months, and suggests that the economy is still a ways from a strong recovery.

The biggest problem retarding a strong recovery is that wages are lagging far behind the economy’s productivity growth. Recent Federal Reserve statistics show that consumers increased their borrowing to finance their holiday spending, but that can’t last unless wages begin following. (more…)

What a year it’s been for workers! From Wisconsin to Washington, D.C., on the football field and the factory floor, we’ve seen unprecedented attacks on working families from big corporations and their friends in elected office. But what the folks behind these attacks didn’t anticipate was that their actions would ignite a movement — that the worst moments for workers in 2011 might just be the beginning of a great political awakening for the 99 percent.

The Worst

1. Wisconsin Gov. Scott Walker strips public employees of their collective bargaining rights — Last spring, anti-worker legislators in Wisconsin rammed through a bill that strips the state’s public employees of their right to collectively bargain. After initially using the state’s fiscal challenges as the rationale for his bill, Gov. Walker publicly admitted that the collective bargaining repeal saved the state absolutely no money. This revelation affirmed that the nationwide attacks on public employees were solely designed to hurt workers and their unions — not balance the budget.
2. SB 5 passes in Ohio — In early March, Ohio Gov. John Kasich signed Senate Bill 5 into law. The bill scaled back public employees’ ability to bargain together for better workplace conditions and improved safety, marking a major victory for the corporate-backed lawmakers playing politics at the expense of the 99 percent.
3. Income inequality soars to new heights — In September, the Census Bureau reported that one in six Americans are living in poverty. Meanwhile, CEO pay has continued to skyrocket. The result? Income inequality that puts the United States on par with countries like Cameroon and Uganda. And recent studies show that the rise in inequality here in the U.S. is directly tied to declining union membership.
4. Right-wing attacks on the NLRB endanger workers’ rights — Instead of creating jobs, GOP politicians in Congress spent the year launching more than 50 attacks on the National Labor Relations Board (NLRB) and the National Labor Relations Act — the only recourse workers have when their rights to form unions and bargain collectively are violated. These cynical political games have not only threatened employee safeguards, but the unprecedented overreach by lawmakers has jeopardized the fundamental American principle of due process.
5. Amazon workers face sweatshop conditions — This fall, an investigative report revealed that employees at Amazon.com’s Breinigsville, Pa., warehouse had been working on their hands and knees at a frantic pace in temperatures so high that the company kept ambulances parked outside. Amazon has yet to address the core problems at the warehouse, including brutal working speeds and overuse of temporary employees, for whom organizing for better working conditions is extremely difficult.

The Best

1. The 99 percent fights back — With the attacks on workers escalating from Wisconsin to Washington, D.C., everyday Americans decided it was time to fight back. Beginning this fall, the Occupy Wall Street movement has succeeded in shifting the debate — highlighting the income inequality that puts our whole economy at risk and bringing our nation’s focus back to where it belongs: on the 99 percent. (more…)

The President’s speech this week in Osawatomie, Kansas — where Teddy Roosevelt gave his “New Nationalism” speech in 1910 — is the most important economic speech of his presidency in terms of connecting the dots, laying out the reasons behind our economic and political crises, and asserting a willingness to take on the powerful and the privileged that have gamed the system to their advantage.

Here are the highlights (and, if you’ll pardon me, my annotations):

For most Americans, the basic bargain that made this country great has eroded. Long before the recession hit, hard work stopped paying off for too many people. Fewer and fewer of the folks who contributed to the success of our economy actually benefitted from that success. Those at the very top grew wealthier from their incomes and investments than ever before. But everyone else struggled with costs that were growing and paychecks that weren’t — and too many families found themselves racking up more and more debt just to keep up.

He’s absolutely right — and it’s the first time he or any other president has clearly stated the long-term structural problem that’s been widening the gap between the very top and everyone else for thirty years — the breaking of the basic bargain linking pay to productivity gains.

For many years, credit cards and home equity loans papered over the harsh realities of this new economy. But in 2008, the house of cards collapsed.

Exactly. But the first papering over was when large numbers of women went into paid work, starting the in the late 1970s and 1980s, in order to prop up family incomes that were stagnating or dropping because male wages were under siege — from globalization, technological change, and the decline of unions. Only when this coping mechanism was exhausted, and when housing prices started to climb, did Americans shift to credit cards and home equity loans as a means of papering over the new harsh reality of an economy that was working for a minority at the top but not for most of the middle class.

We all know the story by now: Mortgages sold to people who couldn’t afford them, or sometimes even understand them. Banks and investors allowed to keep packaging the risk and selling it off. Huge bets — and huge bonuses — made with other people’s money on the line. Regulators who were supposed to warn us about the dangers of all this, but looked the other way or didn’t have the authority to look at all.
It was wrong. It combined the breathtaking greed of a few with irresponsibility across the system. And it plunged our economy and the world into a crisis from which we are still fighting to recover. It claimed the jobs, homes, and the basic security of millions — innocent, hard-working Americans who had met their responsibilities, but were still left holding the bag. (more…)

In brief: The Bureau of Labor Statistics’ household survey shows unemployment at 8.6 percent, and the payroll survey shows 120,000 new jobs in November (140,000 from the private sector, and a loss of 20,000 in the public sector). BLS also revised upward its job numbers for September and October.

What does it mean? We’re not out of the woods but we might be seeing some daylight.

Maybe. Here’s what you need to worry about:

First, this rate of job growth is barely enough to keep up with the growth in the working-age population. So we’re not making progress on the backlog of more than 13 million jobless Americans, and another 11 million working part-time who’d rather have full-time jobs. (more…)

Employment was up 120,000 last month and the unemployment rate dropped significantly, to 8.6% in November down from 9% in October. Job growth in October and September was revised up by 72,000.

While the employment story has improved over the past few months, the decline in the November unemployment rate isn’t as good as it sounds. People who drop out of the labor force, like those who give up looking for work, are not counted in the jobless rate, and about half of the 0.4 percentage point decline was due to this factor. In fact, about 190,000 of the unemployed left the labor force last month.

Once again, the private sector added jobs — 140,000 last month — and the public sector cut them (down 20,000).

The report is consistent with slightly better economic performance over the past few months. It’s always useful to average over a few months to work out some of the monthly noise in the data and over the past three months, employment is up by an average of about 140,000 per month, compared to 84,000 over the prior three months. (more…)

Terry Maile’s supervisor called her into a conference room with all of her co-workers to hear the news: It was their last day of employment at Level 3 Communications in Pittsburgh.

That was it. The jobs were gone to India.

“I couldn’t stop crying,” said Maile, a divorced mother of one, who until that moment had spent her professional life as a telecommunications worker before being laid off first by Verizon and then by Level 3.

Even then, Maile said, she still believed in the American Dream.

You’ve got to work hard… work hard.

Maile owned her own home. Although she had been forced to liquidate her retirement after the Verizon layoff, she had begun to build it back up. Then came the Level 3 layoff. It shook her to her core. (more…)

OK. Thanksgiving’s behind us, the 91% of the workforce with jobs are back to work, and in DC at least, there’s a sense of “what happens next?” in the air.

Here’s one man’s answer:

Anatomy of a failure: It would be a pleasure to never hear the words “super” and “committee” in the same sentence again for a while but I’m afraid it’s actually important to review what happened. The “both sides are to blame” meme is irresistible but doesn’t hold up to even casual scrutiny. The Democrats on the committee went deep into Republican territory with spending cuts, putting hundreds of billions of cuts in Medicare and Medicaid on the table, and asked for less revenue in exchange than they should have. But the Republicans wouldn’t really budge on taxes and that queered the deal from the start. (Their latest retort: “you can’t raise taxes in a recession… even the president has admitted that”… is nonsense. This is a ten year deal, one that could easily have the tax increases phase in later.)

I’m really not sure how this story gets told and who’d even want to hear it. But it needs to get out there.

Where’s POTUS? The president should not, in my opinion, take any heat at all for not playing along in the deficit reduction follies going on in Congress. The Republicans have made it clear that if he’s for it, they’re agin’ it and I don’t see what’s gained for him getting burned again by them. If I thought his involvement would contribute to a more positive outcome, I’d argue differently, but I don’t. (more…)

Senator Bernie Sanders reacts to the failure of the Senate Super Committee to reach a compromise on the federal budget.