Tags: Morici | structural | problems | recovery

Morici: Structural Problems are Hampering Recovery

Monday, 10 Sep 2012 12:13 PM

Structural problems such as flawed energy and trade policies are hampering recovery and are keeping hiring at bay, said Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland.

The U.S. economy added a net 96,000 jobs in August, according to the Bureau of Labor Statistics, far below market consensus forecasts for about 125,000.

The unemployment rate fell to 8.1 percent from 8.3 percent as more frustrated people exited the labor force — only jobless workers who are actively seeking employment are counted as part of the labor force.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

Economic growth, meanwhile, slowed to a crawl in the second quarter, expanding by 1.7 percent.

President Barack Obama’s supporters claim the administration inherited an economy facing greater challenges and more hurdles than other since the Great Depression, though a look at recent history says otherwise.

“Ronald Reagan inherited a similarly troubled economy, with unemployment peaking at 10.8 percent in November 1982. During his recovery, [gross domestic product] growth was averaging a brisk 6.3 percent in contrast to Obama’s 2.2 percent,” Morici wrote in an OpEd appearing in the Boston Herald.

Obama’s own policies are to blame for the weak recovery.

“Growth is weak and jobs are in jeopardy because temporary tax cuts, stimulus spending, large federal deficits, expensive but ineffective business regulations and costly healthcare mandates do not address structural problems holding back dynamic growth and jobs creation — the huge trade deficit and dysfunctional energy policies,” Morici wrote.

China has long kept its currency artificially cheap, which gives it an unfair advantage over the United States in the global trade arena, though the U.S. government doesn’t assert itself enough in that matter.

Meanwhile, the U.S. should be drilling for more oil and natural gas at home with the aim of lowering energy costs and reducing its dependency on foreign oil and other energy sources.

“Oil and trade with China account for nearly the entire $600 billion trade deficit. Prompt efforts to produce more domestic oil, redress the trade imbalance, relax burdensome business regulations and curb healthcare mandates and costs would create 5 million to 10 million jobs, and lower unemployment to about 5 percent,” Morici said.

Other analysts agree the August jobs report does not bode well for broader U.S. recovery.

“It was a decidedly negative report due to the meager number of jobs created in August and the downward revision for the two prior months,” said John Kilduff, a partner at Again Capital in New York, according to Reuters.

The Bureau of Labor Statistics reported that July’s figures were revised down to 141,000 from 163,000, while June’s figures were revised down to 45,000 from 64,000.

“The reduced unemployment rate is likely more about increased despair among job seekers than increased hires,” Kilduff added.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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2012-13-10
Monday, 10 Sep 2012 12:13 PM
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