December Unemployment Figures Disappoint Obama Team

The December unemployment figures were released on January 8, 2010 and showed that 85,000 jobs were lost for the month. Since the pre-release guesstimate was for only a small loss for the month, or perhaps even a tiny gain, the figures disappointed Team Obama.

Or did they? President Obama is gearing up for yet another job stimulus program so perhaps with politics being as they are today it was decided that a loss of jobs in December might be helpful in proving that a further stimulus package is required. It really has become hard to believe that the government releases the unemployment report without taking into account political considerations.

However the government came up with the figures one telling statistic is the large number of people who have dropped out of the labor force. Over 900,000 former workers have decided that a job is impossible for them to get given current market conditions. Without this reduction in those seeking work and other adjustments the 10% unemployment rate and the loss of 85,000 jobs for the month would have been far worse.

Since President Obama has taken office approximately 4,200,000 jobs have disappeared. While President Obama can rightfully say that his administration inherited a tremendous mess from George Dubya Bush, one that will take some time to clean up, there is no doubt that unless the job market improves considerably before the midterm elections Obama and the Democrats will face a major hit in the 2010 elections.

The real problem is that the Obama team, along with many Americans, have yet to face up to the fact that we are in the early stages of a depression, not an ordinary recession. The talk is still about a recovery. There is no recognition at all that it is impossible to return to the happy motoring days of 2005. Valuable resources are being wasted by the government to prop up zombie banks, dinosaur automotive companies, and undeserving companies like AIG, while trying to bring back an economy that was built upon the wasteful largely unproductive back of consumerism.

It is highly unlikely that with crude oil once again in the danger zone above $80 dollars per barrel, and probably headed to above $100 per barrel by year end, that there will be any meaningful job recovery during 2010. In fact, there is a high probability that the economy will have a double dip recession. Should this prove to be the case team Obama could well face a bloodbath in the midterm elections.

While there are many items on Obama’s overfilled plate, such as healthcare, immigration issues, security issues, and the wars in Afghanistan and Iraq, it really comes down to how the job picture looks by the November 2010 elections as to whether the Democrats will take a real beating in those elections.

One can reasonably bet that the government will pull out all the stops in an effort to give the job market a boost during 2010. This means that Uncle Sam will be spending even more money that it doesn’t really have in an effort to save the economy. While increased deficit spending may well get some short-term relief the prospect over the long-term is downright depressing.

The United States is headed toward one of two things, neither one of them pleasant. One is that the government will eventually be forced to default on its obligations. In my opinion, this is highly unlikely but not impossible. The more likely event is that the government will attempt to control inflation in a way that allows them to pay off more debt with ever cheaper dollars. The danger here, of course, is that Ben Bernanke, Tim Geithner, and President Obama are not quite as smart as they think they are and take the United States into an impossible to control hyperinflationary environment.

The loss of 85,000 jobs for the month of the December 2009 may turn out to be one of the more minor things for the administration to worry about in 2010. One thing is very certain. 2010 will turn out to be an extremely interesting year.