Republican Mitt Romney’s campaign mocks President Barack Obama for saying last week that “the private sector is doing fine,” with unemployment above 8 percent and 12.7 million Americans out of work.
While there’s room for debate about the definition of “doing fine,” the BGOV Barometer shows that by some measures - - corporate profits, stock market performance and hiring by private employers -- the health of the U.S. private sector is improving.
When it comes to hiring, companies are ahead of government employers, according to Labor Department data. In the 35 months since the recession ended in June 2009, private employers have added 3.1 million jobs, compared to a loss of 601,000 federal, state and local government workers.
Among broader measures of private sector health, corporate profits are reaching record highs. Profits by members of the Russell 3000 Index of U.S. companies last year topped $1 trillion for the first time, quadrupling a combined $250 billion during the depths of the recession in 2008, according to data compiled by Bloomberg.
“The corporate sector is in a relatively strong position,” said Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities Inc. in New York. “The key weakness is the overall economy.
“It’s the uncertainty about the economic outlook and the question mark over Europe that’s becoming increasingly larger and more ominous,” Riccadonna said. “That is preventing them from hiring more aggressively or investing more aggressively.”
Obama made the “doing fine” comment while contrasting private employment growth with job losses related to state and local government budget cuts. He tried to fend off political critics later the same day, saying the “economy’s not doing fine.” Still, he told reporters there has been “some good momentum” in the private sector.
Romney is replaying the president’s June 8 remark in a television commercial that asks: “How can President Obama fix our economy if he doesn’t understand it’s broken?”
Speaking yesterday in Cleveland, Obama poked fun at the attacks he’s sustained since his “doing fine” comment.
“There will be no shortage of gaffes and controversies that keep both campaigns busy and give the press something to write about -- you may have heard I recently made my own unique contribution to that process,” Obama said. “It wasn’t the first time. It won’t be the last.”
Romney, campaigning in Cincinnati, said Obama hasn’t done enough to put Americans back to work.
“If you think the president’s right when he said the private sector is doing fine, well then he’s the guy to vote for,” he said. “As you look at the president’s record, it is long on words and short on action that created jobs.”
While the candidates spar over the U.S.’s economic goals for the next four years, Obama may benefit from the fact that 68 percent of Americans say his predecessor, Republican George W. Bush, should have at least a moderate amount of blame for the state of the economy, according to a Gallup poll conducted June 7-10. The survey of 1,004 adults has an error margin of plus or minus four percentage points.
“This was not your normal recession,” Obama said yesterday in Cleveland. “We acted fast. Our economy started growing again six months after I took office and it has continued to grow for the last three years.”
The Commerce Department reported May 31 that total U.S. corporate profits rose to almost $2 trillion, an all-time high, during the first three months of 2012.
At the same time, earnings growth slowed, stoking concerns about whether the pace of recovery is faltering. The 0.6 percent increase from 2011’s fourth quarter was the smallest since the end of 2008.
The Standard & Poor’s 100 Index (OEX) has slid 5.8 percent from a 52-week high on April 2. Nonetheless, the S&P 100, which includes some of America’s biggest companies, is up 6.7 percent in 2012. The technology-heavy Nasdaq 100 Index has risen 11.5 percent this year.
Over a longer period, the S&P 500 Index (SPX) has risen 65 percent since Obama was inaugurated in January 2009. That’s the stock-market benchmark’s best performance at this point in a president’s first term since a 77 percent gain under Republican Dwight Eisenhower from January 1953 to June 1956.
The 3.1 million private jobs added under Obama since the recession ended in June 2009 trails the 4.3 million average gain at the same point after seven other U.S. recessions since 1961.
The average is bolstered by almost 8.8 million private jobs added under President Ronald Reagan over the 35 months after a recession ended in November 1982. The Federal Reserve under Chairman Paul Volcker helped fire up the economy by cutting interest rates after inducing a slowdown designed to tame inflation.
Private job growth averaged about 3.6 million during the 35-month periods after the other six recessions since John Kennedy’s presidency.
The 601,000 drop in government employment since June 2009 is by far the biggest at the same point after any of the last eight U.S. recessions. At this point in the other seven recoveries, public employment had gained an average of 616,000 jobs.
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