Looking for a job? Good luck with that.

Yeah … we’ve been here before. Here I go yammering about Barack Obama again. Fact is, I just cannot believe that this guy has turned out to be as hideously bad as he clearly is. Certainly he telegraphed what kind of a president he was going to be during the 2008 campaign, but the human spirit is such that you still want to hold out a bit of hope – until hope becomes delusional.

Do you understand just how bad our economy is? Let me share just a few statistics with you. There have been several economic recessions since the end of World War II. Every recession, of course, has been followed by a recovery. The Joint Economic Committee has studied recoveries from previous recessions and compared them to the current situation. We are now 38 months past the beginning of the recession. When past recessions are studied the Joint Economic Committee found that at the 38-month marker employment would be about 3.7% higher than it was at the beginning of the recession. This, though, is the Obama recovery. Employment is now – at the 38-month mark – 5% below what it was at the start of the recession. This is the worst recovery from a recession since World War II.

Stephen Moore of the Wall Street Journal shares another statistic with us. In previous recessions our economy enjoyed an average growth of 9.9% over 13-quarter period since the beginning of the recession. Where are we now? Our GDP has grown by 0.8% over that same 13-quarter period since the beginning of the 2008 recession. There’s the ObamaRecovery for you.

Are these numbers boring for you? Well if you’re looking for a job, or worried about keeping the job you have, you should be digesting these numbers and addressing the cause — and the cause is Barack Obama.

The American economy is a private sector economy. If you’re looking for a job in the private sector:

* You’re looking for a job in that sector of our economy that Barack Obama refers to as the “enemy.”
* You’re looking for a job in that sector of the economy that must endure tax increases so that, in the words of Obama’s Treasury Secretary, the federal government won’t have to spend less.
* You’re looking for a job in that sector of our economy that is suffering an unprecedented regulatory assault from Washington DC.

If you’re looking for a job your greatest hope is in making sure that Barack Obama is not a two-term president.

With the US trapped in depression, this really is starting to feel like 1932

People queue for a job fair in New York. The share of the US working-age population with jobs in June fell from 58.7pc to 58.5pc. The ratio was 63pc three years ago. Photo: EPA

By Ambrose Evans-Pritchard

The US workforce shrank by 652,000 in June, one of the sharpest contractions ever. The rate of hourly earnings fell 0.1pc. Wages are flirting with deflation.

“The economy is still in the gravitational pull of the Great Recession,” said Robert Reich, former US labour secretary. “All the booster rockets for getting us beyond it are failing.”

“Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing,” he said.

California is tightening faster than Greece. State workers have seen a 14pc fall in earnings this year due to forced furloughs. Governor Arnold Schwarzenegger is cutting pay for 200,000 state workers to the minimum wage of $7.25 an hour to cover his $19bn (£15bn) deficit.

Can Illinois be far behind? The state has a deficit of $12bn and is $5bn in arrears to schools, nursing homes, child care centres, and prisons. “It is getting worse every single day,” said state comptroller Daniel Hynes. “We are not paying bills for absolutely essential services. That is obscene.”

Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment rate is not exploding to a post-war high.

Let us be honest. The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP.

The share of the US working-age population with jobs in June actually fell from 58.7pc to 58.5pc. This is the real stress indicator. The ratio was 63pc three years ago. Eight million jobs have been lost.

The average time needed to find a job has risen to a record 35.2 weeks. Nothing like this has been seen before in the post-war era. Jeff Weninger, of Harris Private Bank, said this compares with a peak of 21.2 weeks in the Volcker recession of the early 1980s.

“Legions of individuals have been left with stale skills, and little prospect of finding meaningful work, and benefits that are being exhausted. By our math the crop of people who are unemployed but not receiving a check amounts to 9.2m.”

Republicans on Capitol Hill are filibustering a bill to extend the dole for up to 1.2m jobless facing an imminent cut-off. Dean Heller from Vermont called them “hobos”. This really is starting to feel like 1932.

Washington’s fiscal stimulus is draining away. It peaked in the first quarter, yet even then the economy eked out a growth rate of just 2.7pc. This compares with 5.1pc, 9.3pc, 8.1pc and 8.5pc in the four quarters coming off recession in the early 1980s.

The housing market is already crumbling as government props are pulled away. The expiry of homebuyers’ tax credit led to a 30pc fall in the number of buyers signing contracts in May. “It is cataclysmic,” said David Bloom from HSBC.

Federal tax rises are automatically baked into the pie. The Congressional Budget Office said fiscal policy will swing from
a net +2pc of GDP to -2pc by late 2011. The states and counties may have to cut as much as $180bn.

Investors are starting to chew over the awful possibility that America’s recovery will stall just as Asia hits the buffers. China’s manufacturing index has been falling since January, with a downward lurch in June to 50.4, just above the break-even line of 50. Momentum seems to be flagging everywhere, whether in Australian building permits, Turkish exports, or Japanese industrial output.

On Friday, Jacques Cailloux from RBS put out a “double-dip alert” for Europe. “The risk is rising fast. Absent an effective policy intervention to tackle the debt crisis on the periphery over coming months, the European economy will double dip in 2011,” he said.

It is obvious what that policy should be for Europe, America, and Japan. If budgets are to shrink in an orderly fashion over several years – as they must, to avoid sovereign debt spirals – then central banks will have to cushion the blow keeping monetary policy ultra-loose for as long it takes.

The Fed is already eyeing the printing press again. “It’s appropriate to think about what we would do under a deflationary scenario,” said Dennis Lockhart for the Atlanta Fed. His colleague Kevin Warsh said the pros and cons of purchasing more bonds should be subject to “strict scrutiny”, a comment I took as confirmation that the Fed Board is arguing internally about QE2.

Perhaps naively, I still think central banks have the tools to head off disaster. The question is whether they will do so fast enough, or even whether they wish to resist the chorus of 1930s liquidation taking charge of the debate. Last week the Bank for International Settlements called for combined fiscal and monetary tightening, lending its great authority to the forces of debt-deflation and mass unemployment. If even the BIS has lost the plot, God help us.

Depression 2010?

By Robert Samuelson

WASHINGTON — It is now conventional wisdom that the world has avoided a second Great Depression. Governments and the economists who advise them learned the lessons of the 1930s. When the gravity of the financial crisis became apparent in late 2008, the response was swift and aggressive. Central banks like the Federal Reserve and the European Central Bank dropped interest rates and lent liberally to threatened financial institutions and rattled investors. The United States and many countries approved “stimulus” programs of tax cuts and additional spending. Panic was halted. A downward spiral of falling private spending and rising unemployment was reversed. The resulting economic slump was awful. But it was not another Great Depression. The worst has passed.

Or has it? Greece’s plight challenges this optimistic interpretation. It implies that celebration is premature and that the economic crisis has moved into a new phase: one dominated by the huge debt burdens of governments in advanced societies. Comparisons with the Great Depression remain relevant — and unsettling. Now, as then, we may be prisoners of deep and poorly understood changes to the world economic system.

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Historians increasingly attribute the Depression to broad geopolitical upheavals. World War I shattered the existing global economic order. Dominated by Great Britain, it fostered vibrant trade and rested on the gold standard. (Under the gold standard, paper currencies could be converted into gold coins or bullion.) The war also spawned huge international debts, reflecting German war reparations and large U.S. loans to Britain and France. It was impossible to reconstruct the prewar order. Britain was too weak, the gold standard was too constricting, and the debts were too heavy. But countries tried, because the prewar order had delivered prosperity. This futile effort brought on Depression. Only when economic hardship became unbearable were unrealistic goals (keeping the gold standard, repaying debts) abandoned.

There are eerie, if crude, parallels now. The welfare state is today’s equivalent of the gold standard. With aging societies, advanced countries have promised more benefits than their tax bases can support. Hence, high government debt. Greece is merely the canary in the coal mine. But politicians resist cutting popular benefits except under extreme pressure. It takes a crisis. Greece, again. Another unsettling parallel is the global economy. The United States’ leadership since World War II is eroding before China’s ascent. There’s a danger now, as then, of a power vacuum. Witness the long delay in coming to Greece’s aid. No one country acted decisively, even as markets grew nervous.

Of course, these parallels do not preordain a second Depression. But they at least clarify today’s confusing economic outlook. There’s a tug-of-war. The normal mechanics of the business cycle signal recovery, while deeper economic weaknesses threaten it. In late 2008 and early 2009, fear and hysteria were almost palpable, especially in the United States. Consumers and companies cut spending anywhere they could. From September 2008 to June 2009, the U.S. economy lost 6 million payroll jobs. In 2009, American car sales were almost 40 percent lower than in 2007. Governments’ frenetic interventions stabilized confidence. People and firms are opening their wallets again, here and abroad. The world economy will grow almost 4.3 percent in 2010 and 2011, with the United States expanding at an average of nearly 3 percent, reckons the International Monetary Fund.

But the deep-seated problems remain. Three stand out: first, the weight of the welfare state and aging populations; second, the burden of huge private debts (mortgages and consumer loans in America and elsewhere); and finally, huge imbalances in global trade, with some countries — notably China — running massive surpluses and others — notably the United States — having large deficits. Each threatens a vigorous recovery that could conceivably plunge the world back into a protracted slump.

To cope with big budget deficits, developed countries would cut spending or raise taxes. These steps would weaken recovery. The problem is that failing to do so might have the same effect by creating a financial crisis. Lenders, scared by mounting debt, would insist on higher interest rates. The value of older government bonds, issued at lower interest rates, would drop. Banks around the world, which are big holders of various countries’ bonds, would suffer huge losses. So would other investors and financial institutions. The financial system might again seize up.

The dilemma posed by Greece isn’t unique. It’s different only in degree. In 2009, Greece’s budget deficit was almost 14 percent of gross domestic product (GDP) — its economy. Its accumulated debt was 115 percent of GDP. Meanwhile, Italy’s deficit was 5 percent of GDP and its debt 116 percent of GDP. Spain’s deficit was 11 percent of GDP and its debt 53 percent. Germany’s deficit was 3 percent and its debt 73 percent. The U.S. deficit — calculated slightly differently — was 9.9 percent of GDP; the debt, 53 percent of GDP. Most developed countries, representing about half the world economy, are caught in the same trap.

The same is true, though to a lesser extent, of heavily indebted households in the developed world. As they pare back, or lenders tighten lending standards, consumer spending will remain subdued, depriving the recovery of another powerful propellant. It wasn’t just Americans who enjoyed years of easy credit. In the United States, household debt reached 138 percent of disposable income in 2007, reports the Organization for Economic Cooperation and Development. Elsewhere, comparable figures were also high: 138 percent in Canada; 128 percent in Japan, 186 percent in Britain; 102 percent in Germany. There is no precise threshold as to what constitutes too much debt; but these levels suggest restraint and retrenchment, not exuberant spending.

On paper, the escape from these problems seems plain. China, India, Brazil and other “emerging market” countries would become the world’s engine of growth. Their appetite for advanced goods from the developed world — airplanes, power plants, earth-moving equipment, medical instruments — would raise their living standards and sustain production and employment in advanced countries. This could be happening. The latest IMF forecasts have poorer countries (“emerging and developing economies”) growing at about 6.5 percent in 2010 and 2011 compared with 2.4 percent for all developed countries. The trouble is that this shift requires that China and other Asian countries permanently renounce export-led growth. It’s not clear that they can or will.

Everywhere countries face changes of policies, practices and habits that are deeply woven into their social, political and economic fabrics. Can developed countries gradually rein in their welfare states? Will Asia’s relentless export economies shift to domestic-led growth? Will Americans save more and spend less — and the Chinese do the opposite? As after World War I, reverting to what’s familiar, comfortable and understood may be hazardous. It was the inability to see and adapt to change in the 1920s — a process complicated by the war’s animosities — that fundamentally caused the Great Depression, economic historians Barry Eichengreen of the University of California, Berkeley, and Peter Temin of the Massachusetts Institute of Technology have argued.

The case that we have dodged a second Great Depression rests on a narrower notion: that the Depression was preventable; and that advances in economic knowledge allowed us to do so. If we knew then what we know now, governments could have averted the tragedy. Despite some disagreements, economic scholars subscribe to a broad consensus about what went wrong in the 1930s. Government central banks, like the Fed, were too passive. They didn’t halt bank panics. Intervention at decisive moments (perhaps the failure of the Bank of the United States in late 1930 or Austria’s Credit Anstalt in spring 1931) could have changed history. Instead, mounting unemployment and falling prices fed on each other. Debtors couldn’t repay loans, leading to more bank failures, a contraction of credit and deposit losses. But this time the mistakes were not repeated. Despite criticism, banks were “bailed out.” Money was pumped into credit markets to pre-empt a downward spiral.

By this reading, the world has bought itself time to deal with underlying problems. As the economic recovery strengthens and lengthens, the politics of confronting unstable export-led growth (for Asia) or unsustainable welfare spending (for developed countries) will grow easier. People will be more optimistic about the future; they will be more open to necessary, if not popular, adjustments. This could happen. The world may muddle through, making gradual and messy changes that ultimately defuse another large crisis.

But there is another more sobering reading of the Great Depression. It is that painful and once unthinkable changes are made only under the pressure of acute crisis. One reason that central banks were so passive is that they clung to the gold standard: Relaxing credit policies too dramatically to rescue banks might lead to a loss of gold; people would demand metal to replace paper money. Gold was abandoned in various countries only after it seemed untenable. Similarly, the post-World War I debt problem wasn’t “solved” until repayment was impossible. As for Britain’s place as global leader, the United States assumed that role only in World War II.

Against that backdrop, today’s unresolved problems — over the welfare state, leadership in the global economy — become more ominous. They suggest that major adjustments won’t be made until they’re compelled by some sort of crisis. This possibility defines the present economic drama. Will the recovery encourage conscious changes? Or is recovery providing a false sense of security? The stakes are, of course, enormous, because — as everyone knows — the economic suffering of the Great Depression transformed many countries’ politics for the worse and led to World War II.