Tags: Forbes | Weakest | Economic | Recovery

Forbes: The Weakest Economic Recovery on Record

By John Morgan   |   Sunday, 19 May 2013 08:26 PM

Obamacare plus food stamps add up to the most jobless recovery in American history, according to a commentary by Forbes.

Louis Woodhill, a Forbes contributor who is a software entrepreneur and serves on the Leadership Council of the Club for Growth, noted the United States is now 46 months into its third job-poor recovery since 1991.

According to his thinking, while there is a possibility of faster real GDP growth, there is "no chance" it will translate into a progress toward full employment.

Video: Economist Predicts 'Unthinkable' for 2013

"Whatever else Obamacare does, it drives up the costs and risks of employing people," Woodhill wrote.

"At the same time, the Obama administration's aggressive expansion of alternatives to working (food stamps, Social Security Disability Insurance, extended unemployment benefits, etc.) has reduced the willingness of people to work for the wages that marginal employers can afford to pay."

Last month, America was 15.9 million full-time equivalent (FTE) jobs shy of full employment. Woodhill said that figure was in reality 1.6 million FTE jobs fewer than when the recession ended in June 2009.

At the same time, the Bureau of Economic Analysis reported real GDP is now only 3.18 percent higher its pre-recession level in the fourth quarter of 2007, which he said renders the current recovery the slowest in American history.

Because of poor government policies, it should not be a shock that the FTE jobs ratio is falling even though real GDP growth is moving higher, according to Woodhill.

He noted corporate profits as a percent of GDP are at a record high, but questioned whether companies will start investing their $2 trillion stash of cash.

"Sure, but they'll do it in places that don't have the highest corporate income tax rate in the developed world. And, given the enormous costs and risk created by Obamacare, an increasing share of capital investment within the U.S. is going to be devoted to replacing workers, not hiring more of them."

The New York Times reported new government economic data released Thursday contained some "worrisome signs." Jobless claims jumped last week, while housing starts fell in April and underlying inflation indicated weak demand. The number of Americans filing new claims for unemployment benefits climbed to the highest level in six months. Initial claims for state unemployment benefits rose by 32,000 to 360,000, the biggest increase sInce November and a surprise to analysts, the Times reported.

Video: Economist Predicts 'Unthinkable' for 2013

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Obamacare plus food stamps add up to the most jobless recovery in American history, according to a commentary by Forbes.

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