The coming global recession reflected in May jobs report

Posted by AzBlueMeanie:

We live in a global economy. And the global economy is biting us in the butt.

As Matthew Yglesias reported this week, Global economic crisis: China, India, Brazil are slowing down, plunging world into possible recession:

America is still recovering from the Great Recession and Europe is melting down, yet from a global perspective, the economy has never been as healthy or prosperous. The world economy enjoyed amazing growth from 2002-08, took a small dip in 2009, and then went back to growing. Sadly the good news seems to be coming to an end in Brazil, China, and India, and that’s horrible news for us.

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China and India are so large that their catch-up growth was able to raise the entire worldwide rate of economic growth. That’s why the world economy kept growing through the 2008-09 financial calamity.

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The slowdown in India, which remains a much poorer country than China, is very alarming.

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The Chinese growth dynamo that rescued the world economy after the financial crisis isn’t going to reappear this time around. That means the stakes as Europe confronts the ongoing meltdown of its banks and America faces the prospect of a new debt ceiling standoff are higher than ever. The bad economic news of 2008-09 came with the major silver lining that growth continued in the places that needed it most. This time around, if the rich countries can’t get our act together, the whole world will spiral into recession.

They are sounding the alarm bells in Europe this week as well. Eurozone is unsustainable, European bank president says:

U.S. and European officials, who just weeks ago seemed to be getting a handle on the eurozone's financial crisis, are now scrambling to prevent a new round of problems from pulling down some of Europe's largest economies.

European Central Bank President Mario Draghi warned in Brussels, Belgium, on Thursday that he considers the eurozone's current structure "unsustainable" and that the region's governments must surrender far more budget and regulatory power to a central authority if the currency union is to be saved.

His comments and an intense week of high-level lobbying by U.S. officials come amid a worldwide swoon on stock markets, a flight by investors to the haven of U.S. and German bonds, and a growing concern that problems in Spain's banking sector may force the eurozone's fourth-largest economy to seek a costly bailout.

Major U.S. stock-market indexes were down 6 percent in May, and the euro is trading near a two-year low against the dollar.

This is the context one needs to understand today's jobs report. But this is an election year, and politicians do not do "context." They do the blame game. They blame their opponent, rather than the flawed economic policies at the heart of the matter because voters just don't get economics, and don't care.

As Steve Benen writes today, Brutal new jobs report disappoints:

The expectations were that the economy, after a rough April, would "snap back in May," producing 150,000 jobs. As of this morning, the new report from the Bureau of Labor Statistics showed an economy that added less than half that figure: the U.S. created only 69,000 jobs in May, while the unemployment rate inched higher to 8.2%.

As is nearly always the case, there was a gap in the public vs. private sectors — American businesses added 82,000 jobs last month, while the government shed 13,000 jobs. [austerity measures]

Common sense suggests policymakers would see data like this and act immediately, taking bold steps to boost job creation. Given Republican power in Congress, however, that's no longer an option. [The House spent yesterday debating yet another abortion bill instead.]

Adding insult to injury, the job totals for both March and April were both revised in the wrong direction. There's no sugarcoating today's job news — it's a disaster, and the worst report since May 2011.

The only Americans thrilled by today's news is Mitt Romney's campaign, which needs bad news to advance their ambitions, though I'd remind the Republican campaign that, as of this week, taking an economy that was losing jobs and turning it into an economy that's adding jobs is a sign of success, not failure.

Here's another chart, this one showing monthly job losses/gains in just the private sector since the start of the Great Recession.

It was just last September when President Obama delivered an address to a joint session of Congress, laying out a detailed plan to boost job creation. The road not taken:

It's easy to forget, but it was a credible, serious plan — the AJA would have prevented thousands of layoffs for teachers, cops, and firefighters; invested heavily in infrastructure; and cut taxes intended to spur hiring.

Independent analysis concluded the plan would have a significant and positive effect. From an AP report in September:

A tentative thumbs-up. That was the assessment Thursday night from economists who offered mainly positive reviews of President Barack Obama's $450 billion plan to stimulate job creation. […]

Mark Zandi, chief economist at Moody's Analytics, estimated that the president's plan would boost economic growth by 2 percentage points, add 2 million jobs and reduce unemployment by a full percentage point next year compared with existing law.

Macroeconomic Advisers wasn't quite as optimistic, but its analysis projected that the White House plan "would give a significant boost to GDP and employment over the near-term." The firm would expect to see the proposal create at least 1.3 million jobs.

Despite public clamoring for action on jobs, congressional Republicans reflexively killed the American Jobs Act, saying it was unnecessary. The House wouldn't bring it up for a vote, and a Republican filibuster killed it in the Senate. For GOP policymakers, this was a time when Washington should stop investing in job creation and start focusing on austerity — lower the deficit, take capital out of the economy, and everything would work out fine.

As panic sets in after this morning's brutal jobs report, take a moment to consider a hypothetical: what would the economy look like today if Congress had followed Obama's lead, responded to public-opinion polls, and passed the American Jobs Act? In 2012, do you think the nation could use those 1.3 million jobs or not?

GOP sabotage of the American economy for partisan political advantage in light of the coming global recession should cost every one of them their jobs. But it won't. The feckless corporate media will allow them to get away with it, and even enable it. What a sad time we live in.