The US economic recovery is inadequate, and according to the author, Barack Obama is the culprit. Economist Peter Morici was unimpressed with the 155,000 gain in December payrolls that was announced on Friday. In order to bring employment down to 6 percent, we need to create over 360,000 jobs a month for the next three years.
By David Nelson and Dan Weil
Friday, 04 Jan 2013 03:43 PM
The U.S. economic recovery is inadequate, and President Barack Obama is the culprit, says Peter Morici, an economist and business school professor at the University of Maryland.
“The economy is not growing and creating jobs for two simple words: Barack Obama,” he told Newsmax TV in an exclusive interview.
He was unimpressed with the 155,000 gain in December payrolls announced Friday. “We need to create over 360,000 jobs a month for the next three years to bring unemployment down to about 6 percent,” he said. The jobless rate was 7.8 percent in December.
Recent strength in the stock market says nothing positive for the employment market, Morici says. “The stock market may be near all-time highs, but those all-time highs were hit five years ago. So it’s hardly a great accomplishment.”
In any case, progress in the labor market can’t be measured by progress in the stock market, Morici says. “I’ll be convinced that the labor market is improving when the quality of jobs that people can get improves, when real wages start rising again and we start creating 300,000, 400,000 and 500,000 jobs a month.”
The economy also has to show more strength, he says. “The economy continues to grow quite slowly.” Gross domestic product gained 3.1 percent in the third quarter, and analysts forecast an expansion of about 2 percent this year.
We need growth in the range of 4 to 5 percent, Morici says. He sees former President Ronald Reagan as a good comparison for Obama on the economy, and the current president comes out lacking in Morici’s view.
“Ronald Reagan had very similar problems to Barack Obama,” he notes. “His unemployment rate peaked even higher. And at this point in his presidency, the economy was cracking along at better than 6 percent instead of 2 percent.”
So clearly Obama is the problem, Morici argues.
“The morning after he got his tax increase on the wealthy [the fiscal cliff agreement], which basically raises the cost of capital because it hits so many small businesses, he started talking about getting even more taxes.”
Moody’s Investors Services will downgrade the government’s credit rating, Morici predicts. “It’s quite clear that Americans’ finances are out of control.” The rating now stands at Aaa.
The Treasury already is having trouble selling debt, with the Federal Reserve now buying more than half of new Treasurys issued, he adds.
While some Obama critics complain of an uncertain regulatory environment, Morici says that’s not the issue.
“Businesses have a great deal of certainty,” he states. “They know they’re going to be facing higher taxes, they know they’re going to be facing tougher regulations and in every available turn there will be anti-growth policies from Washington.”
On the issue of the Fed’s quantitative easing, Morici has doubts it will end this year, though some Fed officials recently expressed a desire to do so, noting that some of the bankers sitting on the Fed don’t understand economics at a very deep level.
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