Peter Morici is a professor at the Smith School of Business, University of Maryland, and former Chief Economist at the U.S. International Trade Commission.
Unemployment is stuck near 10 percent and deflation and a stock market collapse threaten. The Federal Reserve and Barack Obama are out of bullets. Near zero federal funds rates, central bank purchases of mortgage backed bonds and other securities, and a $1.6 trillion deficit have failed to revive the economy.
President Obama is seeking to double exports, through marketing programs and new free trade deals. However worthy those initiatives may be, doubling exports does no good if imports double too. By increasing the trade gap, more open trade policies would increase the drag on growth and jobs creation.
Thirteen months into recovery from a deep recession, this is disappointing. The economy must add 13 million private sector jobs by the end of 2013 to bring unemployment down to 6 percent. President Obama's policies are not creating conditions for businesses to hire those 320,000 workers each month, net of layoffs.
Maybe common folk who vote and earn a living in the real world know something Ivy League professors living off endowment income and advising presidents can't fathom. Reckless, unproductive government spending, higher taxes and regulations that accomplish little but to raise costs, kill investment, drive jobs offshore, and destroy prosperity.
Eighteen months in office, President Obama should be evaluated on what he accomplished. On the President’s watch, unemployment has jumped from 7.7 to 9.5 percent, the jobless count has increased 2.7 million, and 3.4 million more Americans have quit looking for work altogether.
It is the season for economic forecasts, and I have been polled by several published surveys. Like other forecasters, I see growth too weak to create enough jobs to pull down unemployment-private sector jobs could even stagnate. The risk of a double dip is at 50 percent. If that happens, the economy likely will stay down for many years.
If the economy goes down a second time, it will not likely recover easily or quickly. The unemployment rate will rise into the teens and conditions reminiscent of the Great Depression will prevail through much of the nation.