WASHINGTON (Reuters) - For anyone puzzled by President Barack Obama’s comment last week that the private sector is “doing fine,” it might help to put on his administration’s blinders and focus on the last two years.
Obama and his staff have taken pains to regularly remind the public that the U.S. economy has been adding jobs every month since March of 2010, for a total of 4.3 million new jobs.
That is about the same pace of job creation as occurred after the 1990-1991 and 2001 recessions, according to Yale economist Benjamin Polak - a heartening sign that the American job machine isn’t much weaker than it has been over the last few decades.
Perhaps that is what Obama meant when he said “the private sector is doing fine” at a news conference on Friday, a remark Republicans jumped on to paint the president as out of touch with economic reality.
Obama, who faces a tough bid for re-election in November, sought later to clarify his views, saying the economy was “not doing fine” - a recognition that the recovery has left many Americans behind.
The 2007-2009 recession was so spectacularly deep that even after 27 straight months of job creation, the private sector has 4.6 million fewer jobs than it did in January 2008.
“The problem is we’re not climbing out of a valley this time. It’s a canyon,” said Polak.
Over a wider time frame, the jobs picture looks even more somber.
Private-sector employment is at roughly the same level as it was in 2001, even though the population has grown. Some economists say the United States has already experienced a lost decade.
Obama also mentioned corporations’ “record profits” as a sign of private-sector health. And indeed, late last year after-tax corporate profits made up their biggest share of national income since 1929, according to one government measure.
Obama’s political gaffe came as he was making the case for further deficit spending to help spur the recovery, including efforts to help stem job losses among cash-strapped state and local governments.
Since March 2010, the public sector has eliminated more than 500,000 jobs as police, teachers and other government employees have been let go. Unlike the federal government, most state and local governments must balance their budgets each year.
The last three years of job losses at the state and local government level have been the most dramatic on records dating to 1955.
One purpose of Obama’s news conference was to press Republicans to act.
Republican candidate Mitt Romney charged that the remarks showed that Obama was hostile to business and wanted to fix the economy by expanding the size of government.
“He says we need more firemen, more policemen, more teachers,” Romney said on Friday. “It’s time for us to cut back on government.”
Romney may have made a misstep of his own with his response by citing local government workers who provide services that are readily apparent to voters. “Romney wants to cut these jobs,” said Stephanie Cutter, Obama’s deputy campaign manager.
There would be well over a million more U.S. jobs today if public-sector employment had grown at the same pace it did after other recent recessions. That would put the unemployment rate between 7 percent and 7.3 percent, instead of the current 8.2 percent, according to Polak.
Even then, Obama would still likely be under pressure.
Editing by Christopher Wilson