Last May, during the peak of improvement we were seeing in the US economy, I went out on a limb and suggested that we would be seeing a turndown that would inevitably impact the 2012 Presidential Election.
Today, I am going to give you an update on the data I have that supports that theory even more today than it did one year ago.
The rate of profit growth drives the US economy. The rate of profit growth drives hiring in the future. Once that simple fact is understood, it becomes rather easy to see where we are headed in terms of both the economic and employment outlooks.
First, let’s look at a bit of history. At the end of the second quarter of 2007, the rate of profit improvement was at 5.84%, falling below the level I contend we need to maintain to have employment growth the following year. Non farm employment stood at 137.6 million. We would be down 0.36 % over the next twelve months. Year over year job losses would continue until September 2010.
Of course it was the third quarter of 2009 that returned us to a rate of profit growth that would indicate we would have positive employment growth one year later. And we did. September 2010 provided a NFP number that showed we had added jobs over the previous 12 months.
Dipping below the threshold and the nation loses jobs. Rise above the threshold and the nation adds jobs.
This is not a coincidence. It is not conjecture. There is a strong correlation between the rate of profit growth and job growth, as I have written here before.
So where are we today?
Since the column I penned on Obama’s Goose simmering, when the most recent four quarters had shown a year over year profit growth of 22.61%, the numbers have been rapidly deteriorating.
Last 12 months ending 3/2011
Last 12 months ending 6/2011
Last 12 months ending 9/2011
Last 12 months ending 12/2011
The trend should be clear and easy to understand. I have analyzed this data back several decades and the relationship between profit growth and employment growth is beyond dispute.
It should also become clear that the NFP number for December 2011 is important because we will be at approximately the same level of employment at the end of December 2012, if not slightly below. We had 132.1 million Americans working at that point. And because we have more working today, there will be jobs shed in the near future.
My indicators also indicate that the rate of profit growth for the four quarters ending March 2012 will be below 5%, indicating that we will also have fewer people working in March 2013 than we had at the end of March 2012.
So, to put it simply, President Obama is going to have to campaign for reelection in an economic environment that is not improving as he and his administration has been claiming, but one that has been weakening, despite adding trillions in additional debt along the way.
Unfortunately, this administration as well as others in the past, have never understood the economic mechanisms that do what we need so badly in our economy. That is to generate jobs in which taxpayers are able to garner higher wages as the opportunities multiply.
Even worse, I feel that we have lost three years of what we could have had getting us on the right path for economic growth despite what may have been going on in the rest of the world.
The Reelection Campaign of Obama will be in a panic as soon as the economic numbers begin to present the reality to the American people (which they have known all along) in a manner that cannot be spun into positive news.
We have been victims of relativism when it comes to economic news and the reporting of how things are progressing. The job numbers were positive. So the right things were happening according to the major media outlets.
But while the numbers were indeed positive, they were simply not positive enough. For employment numbers, we have been told how things were getting better yet we are still more than five million employees below were we were in March 2008.
Beating estimates is also another relative comparison that has done us more harm than good. Beating estimates only tells us that the forecasters are not accurate, not whether or not we are seeing real, sustainable growth.
When you have that fact there are 5 million fewer Americans working, and then you are told that we have the largest GDP in US history, you should be asking yourself which number is not as relevant as it has been made out to be? Are we looking at the wrong indicators? I certainly believe so.
Since the second quarter of 2010, Obama has presided over the largest economy in US history. The largest. Think about that.
Does it feel like the largest economy in US history? Look around. Be honest with yourself.
And when the rest of the year provides more economic disappointments that will not be able to be addressed in the next six months, how do you feel people will vote in November?
Obama has already lost this election. He lost it more than a year ago. But abnegation will keep Obama and his followers from admitting the truth until, in all likelihood, after the election is officially over.
All the data I reference can be found at:
Latest posts by EJ Moosa (see all)
- How Romney Could Secure My Vote and Win in 2012 - July 27, 2012
- Obama's Goose Is Cooked - April 18, 2012
- Why Job Growth Will be Turning Negative - April 10, 2012
- Saturday In The Park: Life Lessons I Learned From My Demeaning Below Minimum Wage Job - January 17, 2012
- Principled Versus Winning - November 4, 2011
- The Failure of the Republican Party - November 4, 2011
- The $1 Trillion Dollar Economic Injection - June 2, 2011
- Obama's Goose is Simmering - May 27, 2011
- Introducing Uncertainty - February 7, 2011
- Know Profits Know Growth Part II - January 25, 2011
- Profit: The Forgotten Objective - July 15, 2010
- It's Time to Separate Our Federal, State, and Local Governments - June 14, 2010
- Is Gov. Charlie Crist a “Good Conservative”? - March 29, 2010
- State of America - March 24, 2010
- Divide and Conquer - March 23, 2010
- How to Destroy the Private Sector via Health Care Reform - March 22, 2010
- Health Care Reform:The Road to Socialism - March 17, 2010
- Why Isn’t Health Care Reform Socialism? - March 7, 2010
- Economophobia:If This is What Ails Us, What is the Cure? - March 4, 2010
- No Profit, No Growth or Know Profit, Know Growth:The Choice is Yours - January 28, 2010
- US Government Spends 61% More than it Receives in 2010 - January 26, 2010
- Minimum Wage, Maximum Impact - November 3, 2009
- Is the US Medical Crisis a Tax Crisis Instead? - October 27, 2009
- A Libertarian’s No-Nonsense Health Care Reform Proposal - August 20, 2009
- American Health Care Reform:Un-Constitutional From the Start - August 8, 2009
- “Cash for Clunkers”: Success Redefined? - August 5, 2009
- Bashing the “Birthers” - August 4, 2009
- SOS: Senators on SpeedDial - August 3, 2009
- Economic Math in Today’s Economy - August 3, 2009
- When There is Nothing Left to Fight For, Who Will Defend Us? - July 29, 2009
- Invasion of Privacy Part II:2007 Survey of Business Owners and Self-Employed Persons - May 29, 2009
- Michael Steele and the Republican Party:Stuck in Denial - May 16, 2009
- When Will it Be Enough? - May 8, 2009
- Taxation Without Representation in the 21st Century - April 20, 2009
- Modern Day Sharecroppers - April 15, 2009
- Your Bank May Fail-But Let’s Keep That A Secret - April 10, 2009
- Right-Sizing the American Economy - April 1, 2009
- “Atlas Shrugged”:Why has Wikipedia Removed Key Elements? - March 30, 2009
- AIG-A Scape Goat of Massive Proportions - March 19, 2009
- I Want My Money Back - March 17, 2009
- Corporate Profit Growth Percentages Drive the Markets and Employment - March 11, 2009
- Panhandlers:Seize the Broom - March 10, 2009
- Help Wanted: Janitor, Pays $15-16 per Hour - March 8, 2009
- Invasion of Privacy :The American Community Survey - March 2, 2009
- General Motors and their Cash Flow Crisis - February 27, 2009
- Why Wall Street Really Matters - February 23, 2009
- Are our 14th Amendment Rights being violatedregarding the Second Amendmentby the States? - February 17, 2009
- Have We Forgotten the Minimum Wage? - February 13, 2009
- The Stimulus Plan We Should Have Gotten - February 12, 2009
- Misplaced Anger - September 12, 2008
- Will Ron Paul Accept or Reject Bob Barr ‘s Offer? - September 10, 2008
- Raising Taxes: The Real Objective - September 8, 2008
- Consider Me Offended - September 4, 2008
- Who’s Afraid of Sarah Palin (And Why) - September 3, 2008
- “My Bible is the State Constitution”-Sarah Palin - September 1, 2008
- The McCain Maneuver - August 29, 2008
- “I am My Brother’s Keeper” - August 28, 2008
- It Takes a Recession - August 28, 2008
- RC Cola and the Libertarian Party - August 19, 2008
- Congratulations, Harrold, Tx! Are you Listening, Atlanta, Ga? - August 15, 2008
- Principled-But atWhat Cost? - August 11, 2008
- The Death Tax We Do Need – Part II - August 8, 2008
- The Death Tax We Do Need - August 5, 2008
- Seniority Rules(and Why Our System Falters) - July 16, 2008
- The Magic Number - July 15, 2008
- The Right to Defend against the Common - March 19, 2008
- Winner Take All Primaries are Destroying The Election Process - March 13, 2008
- Big Brother Was Watching, Elliot - March 11, 2008
- “There is No Way to Make the Irrational Work” - March 10, 2008
- Republican Missteps to Hand White House to Clinton/ Obama - March 8, 2008
- TheTrouble with Inflation - February 21, 2008
- You’re Fired! - February 20, 2008
- The Next Step - February 19, 2008
- Just One Gun - February 15, 2008
- Just Say No-To the Incumbent - February 14, 2008
- Debate:The Lost Art - February 12, 2008
- The Disenfranchised Republican Voter - February 8, 2008
- McCain Vs. Paul - February 7, 2008
- Who is Rand Paul? - February 7, 2008
- Should Ron Paul Stay Just to Speak at the National Convention? - February 6, 2008
- The Republican Party: DOA - February 6, 2008
- Don’t Look - February 5, 2008
- The Tax Rebate Justification - January 25, 2008
- Tax Rebate? Try Welfare Check! - January 24, 2008
- Lil’ Hillary’s Cafe - January 23, 2008
- Weep for Washington D.C, Will We Be Next? - January 18, 2008
- The Politics of Change - January 17, 2008
- Is Fox Coaching the Focus Groups? - January 12, 2008
- One Voter at a Time, One Voter a Week - January 9, 2008
- It’s “We the People”, Stupid! - January 9, 2008
- The United States of Codependency - January 7, 2008
- Illegal Immigration: Victimless Crime? - January 6, 2008
- Winners and Losers - January 4, 2008
- Neal Boortz:Wrong on Ron Paul? - January 3, 2008
- Me Vs. You - January 2, 2008
- The Answer:Fairtax - January 2, 2008
- Who Are These People? - January 1, 2008
- Why Iowa Makes Perfect Sense - December 31, 2007
- Fox News Confirms: “No Need for Paul at Debates” - December 29, 2007
- Thank You Ron Paul - December 29, 2007
- Is Money A Good Substitute for Love? - December 25, 2007
- A Lack of Absolute Faith - December 24, 2007
- Speaking a Different Language - December 23, 2007
- The Wall Street Journalâ€™s Attempt to Diminish Ron Paulâ€™s Campaign - December 22, 2007
- Ron Paul Could Save America and So Could You - December 20, 2007
- Religion and the Constitution:The Real Battle We Face - December 19, 2007
- Is the Fair Tax(Mike Huckabee) Better than No Tax(Ron Paul)? - December 18, 2007
- It’s The Constitution, Stupid! - December 17, 2007
- Constitutional Contract With America - December 15, 2007
- Something Unconstitutional This Way Comes - December 15, 2007
- Let Them Hear the Silence - December 14, 2007
- Do We Deserve this Last Chance Ron Paul is Giving US? - December 13, 2007
- I Want My Rights Back and I Want Them Now - December 12, 2007