Varney's "New Normal" Spin On Jobs Report Buries Ugly Reality Of AusterityJanuary 4, 2013 5:40 PM EST ››› ALAN PYKE
On America's Newsroom, Fox Business host Stuart Varney ignored key economic data in claiming that the December jobs report is proof of "a new normal, bumping along the bottom, settling for this high rate of unemployment, 7.8 percent."
Varney began the segment by warning that "you can spin it any which way, but the fact is, this is a weak report," and ended it by claiming that tax increases assure that high jobless rates are "the new normal."
But Varney's assertion is spin as well, based on a myopic reading of economic data -- Varney and other conservatives who proclaim high unemployment the "new normal" ignore three discrete piles of information that undermine their claim.
First, private-sector job creation in Obama's first term has far exceeded that fostered by the Bush recovery:
The above chart measures from the first full month of each man's presidency. Despite beginning in a deeper economic hole, the beginning of the Obama recovery was marked by a faster turnaround and stronger overall growth in the private sector. By another metric -- annual averages for private-sector job gains -- this "new normal" is also superior to Bush's old normal. This is true whether one counts their full terms in office, or just the years in which the private sector posted annual gains. And it is hardly evidence of a horrifying "new normal" of "bumping along the bottom" due to taxation.
Second, there's a broad consensus among economists that unemployment rates have remained elevated because aggregate demand -- that is, how many goods and services Americans are willing and able to buy -- has been depressed, and the government has not spent sufficiently to balance out the reduction. Varney acknowledged that demand is the key factor to economic growth, but only in the context of decrying tax increases. Varney warned of tax increases and "what [they do] to spending power in our economy," but the America's Newsroom segment made no mention of what federal and state budget cuts have done to that same spending power.
This refusal to acknowledge the damaging economic impact of spending cuts in a time of slow but steady growth is closely related to the third piece of data ignored in Varney's "new normal" analysis:
This divergence between public- and private-sector job growth is anything but normal. Under Presidents Reagan, Bush, and Clinton, public-sector payrolls expanded, helping to lift the overall "spending power in our economy," as Varney put it. But for President Obama, whose efforts at stimulating aggregate demand have been either watered down or stonewalled, the public sector has contracted steadily.
If we are at risk of establishing a harmful "new normal" of any kind, it is one in which unnecessarily stringent short-term fiscal policy leads to forced public-sector layoffs in perpetuity. Varney and America's Newsroom had time to spin the jobs report in an anti-tax direction, but no time to mention the 13,000 public workers -- 11,500 of them teachers -- who were laid off in December.