Obama And Dems Tout Improving Economy. Are They Right?

Dave Johnson

The President says the economy is doing well. Democrats are circulating a “message document” to Democratic candidates that “highlights a string of recent positive economic indicators.” Who have they been talking to? (Hint: the wealthy donor class.)

Economy Improving — For A Few

It is a fact that the economy is improving and the behind-the-scenes numbers that economists and business types pour over look better than they have looked in a long time. As a result corporate profits are at record levels and a few people are doing very, very well, thank you. As they say, when Bill Gates walks into a room filled with poor people the average income in that room is incredible.

But here in the real (outside of DC) world the employees are still cowering and according to a WSJ/NBC poll last week 49% of us think we’re still in a recession, 64% are “still feeling some impact from the recession” and a third “said someone they live with was forced to take a job with a significantly lower income.”

It’s those voters among the 2/3 of us what are not doing all that well who Democrats will need in the midterms. They aren’t going to get their vote by telling them how good things are.

President, Democrats Say Economy Doing Better

Here is President Obama speaking in Kansas City a couple of weeks ago.

We have got back off our feet, we have dusted ourselves off. Today, our businesses have added nearly 10 million new jobs over the past 52 months. (Applause.) Construction is up. Manufacturing is back. Our energy, our technology, our auto industries, they’re all booming.

The unemployment rate is at its lowest point since September of 2008. (Applause.) It’s dropped faster than any time in 30 years. This morning, we found out that in the second quarter of this year our economy grew at a strong pace, and businesses are investing, workers are building new homes, consumers are spending, America is exporting goods around the world.

So the decisions that we made — to rescue our economy, to rescue the auto industry, to rebuild the economy on a new foundation, to invest in research and infrastructure, education — all those things are starting to pay off.

Meanwhile Democrats are circulating a “message document” to candidates, suggesting they talk about how well the economy is doing. In Democrats: Party of Future Change or Past Accomplishment, Bob Borosage brought attention to t “message document” prepared by “top White House officials.” “The document apparently urges Democrats to catch the wave of the economy and answer Republicans arguing that Obama has failed, in part, by touting the progress that has been made.” (Bob reads The Hill so you don’t have to.)

Borosage makes an important point. Democrats shouldn’t bother to tout this to voters, and instead should outline their plan for making things better for regular people.

Three problems with the argument. First, Americans don’t see it. While there is some sense the economy is improving, nearly half still think the economy is in recession. A CBS poll shows over three-fourths think the economy is not improving. That’s why the approval ratings of the president and the Congress are in the sewer.

These opinions are grounded in reality. The jobs being created tend to be part-time and low pay. Good jobs remain scarce. Household incomes are down not up. The wealthiest few are capturing an obscene percentage of the income growth, while the vast majority of Americans struggle with incomes that aren’t keeping up with costs. Over two-thirds of the country is still dealing with the effects of the crash. Politicians run the real risk of simply looking out of touch if they are touting this economy.

Here Is What Regular People Are Still Experiencing

Readers might be familiar with last year’s widely-circulated statistic from Emmanuel Saez of the University of California, Berkeley: 95% of 2009-2012 Income Gains Went to Wealthiest 1%.

Tuesday The Financial Times reported, Record income gap fuels US housing weakness,

The income gap between America’s richest and poorest metropolitan regions has reached its widest on record, shaping an uneven housing recovery that threatens to hold back the broader revival of the world’s largest economy.

Also last week Standard & Poors reported, Income Inequality Is Damaging the Economy, From TIME’s report,

Rising levels of income inequality in the U.S. is a drag on economic growth, and was a factor that contributed to S&P lowering its growth rating over the next decade from 2.5% to 2.8%, the report said. Income inequality leads to extreme economic swings, an uncompetitive workforce, and discourages investment and hiring, per S&P.

This week the nonpartisan U.S. Conference of Mayors (USCM) issued a report on income inequality, U.S. Metro Economies: Income and Wage Gaps Across the US. According to the report, while the country has finally regained all of the jobs lost during the recession those jobs pay an average 23 percent less than the jobs that were lost.

The Alliance for American Manufacturing (AAM) responds to the report, saying “… one of the chief reasons for that big wage gap is because the manufacturing jobs that were lost during the recession haven’t come back.”

About 2.27 million manufacturing jobs were lost during the recession, and the average annual wages for those jobs were $63,215, according to the USCM. Data from the Bureau of Labor Statistics backs the USCM report — there were 14.2 million manufacturing jobs in the United States in January 2006; by July 2014 there were roughly 12.1 million manufacturing jobs.

Meanwhile, the new jobs gained through the second quarter of 2014 posted average wages of $47,171, and included growth in sectors such as hospitality, health care and administrative support, according to the USCM.

People who lost middle-class manufacturing jobs during the recession continue to struggle. That’s driving a rise in income inequality and continuing to hinder the slow-going economic recovery.

AAM also has their #AAMeter that looks at the President’s campaign pledge to do what it takes for the economy to gain back 1 million manufacturing jobs. The score so far? +135,000. Not so good. The country will have to generate 27,758 new manufacturing jobs each month to reach the 1 million goal. (Click here to learn about something that could accomplish this.)

What To Do?

Here is how Democrats should campaign: “We have offered an agenda and multiple bills for making life better for 99% of us. Republicans have obstructed everything since the Stimulus, even forcing cuts that have made things worse. Here is our Middle Class Jumpstart agenda. Here is our Make It In America agenda. Republicans are obstructing and will obstruct these. Vote for us to get these passed.”

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