"Obama’s troubles is, simply, the continuing weakness of the job market." [View All]

[ProSense]

Krugman:

Of Fate and Fumbles

It has not been a good year for Obama, or for the progressive agenda. But why? Ignore all the pontificating about how Obama needed to focus differently, seek bipartisanship with people who have no interest in making a deal, etc.. The primary factor in Obama’s troubles is, simply, the continuing weakness of the job market.

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What seems clear to me is that the economics were bound to be difficult. Long before the bad numbers started rolling in, there were strong reasons to believe that the economy was in for a prolonged jobless recovery. For one thing, that’s what had happened after recent US recessions, and this slump seemed to share the same characteristics; for another, prolonged periods of weak employment are normal in the aftermath of financial crises (pdf).

So one case you can make is that Obama was just fated to have a bad first year. FDR had the good luck not to take office until more or less everything that could go wrong, had; the bank runs had already happened, the big decline in GDP was already nearing its end. Obama, by contrast, came into office early enough to take the blame for the continuing slump.

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Krugman also states:

What is clear, however, is that the Obama economic team didn’t see themselves as being in that position. All indications are that the top people believed that the economy would start adding jobs and unemployment would start falling fairly quickly even without a big stimulus. I don’t know why they hadn’t taken on board the lessons of the past two recessions, plus that of financial crises elsewhere, but they clearly hadn’t.

That's just not accurate.

All in all, the legitimate infrastructure spending, which in its expanded form would include Obama's ambitious plans to invest heavily in renewable energy sources, will most likely not start coming on line until the fourth quarter of the year and its full effect is at least 12 to 18 months away. In other words, the fiscal stimulus measures that the incoming Administration will be pushing through are more a 2010 story.

The same needs to be recognized regarding the new President's assertion last week that his economic stimulus plan will create or save between 3 and 4 million jobs over the next two years. Even if these numbers were to be momentarily accepted at face value, the job creation almost certainly be heavily back-loaded. It's precisely for that reason that the Obama team is referring to such expected outcomes over the time frame of the next two years, carefully refraining from attaching a specific estimate to 2009 alone.

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"But, as I made clear at the time it was passed, the Recovery Act was not designed to work in four months - it was designed to work over two years," said Obama. "We also knew that it would take some time for the money to get out the door, because we are committed to spending it in a way that is effective and transparent. Crucially, this is a plan that will also accelerate greatly throughout the summer and the fall. We must let it work the way it's supposed to, with the understanding that in any recession, unemployment tends to recover more slowly than other measures of economic activity."

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Exclusive: Obama stimulus reduced our pain, experts say

Unemployment would have hit 10.8% — higher than December's 10% rate — without Obama's $787 billion stimulus program, according to the economists' median estimate. The difference would translate into another 1.2 million lost jobs.

The stimulus did what it was supposed to, and there is no guarantee that an additional $300 to 400 billion would have made a huge difference to date. Even Krugman admits this might not have been politically possible. In fact, the proposed stimulus was $900 billion.

State-Level Data Show Recovery Act Protecting Millions From Poverty

In addition to keeping more than 6 million Americans out of poverty in 2009, ARRA is reducing the severity of poverty for 33 million additional Americans who are poor by lifting their incomes, typically by more than $700. Due to data limitations, these figures are conservative and underestimate the number of people that the seven ARRA provisions examined here have helped in 2009.

OBAMA ADMINISTRATION AWARDS NEARLY $1.4 BILLION IN HOMELESS GRANTS

Highlights of HUD's Homeless Assistance

• HUD is awarding nearly $1.4 billion to renew funding to 6,445 local programs. HUD awarded $1.2 billion to 5,825 renewal projects last year.
  
  
• More than $738 million is being awarded to 2,997 projects that provide permanent housing solutions for homeless families and individuals, including persons who are chronically homeless
  
  
• More than 3,200 local projects that serve families with children will receive over $733 million.

HUD’s housing and service programs funded through the Continuum of Care competition establish the foundation for communities to serve many of the nation’s most vulnerable individuals and families. Based on the Annual Homeless Assessment Report (AHAR) released by HUD in July 2009:

• Nearly 1.6 million people use emergency or transitional housing programs over the course of a year; and
  
  
• On a given night, approximately 664,000 people are homeless. Of those:
  
  
  1. More than 124,000 are chronically homeless;
     
     
  2. 36.5 percent are chronic substance abusers;
     
     
  3. 26.3 percent are severely mentally ill; and
     
     
  4. About 15 percent are veterans.

Also, while everyone is debating health care reform and acknowledging the benefits to Americans, the economy and deficit reduction, this ambitious effort is part of Obama's agenda to alleviate the financial burden and suffering of millions of middle class and poor Americans.