SOTU: I Think We're Turning Japanese

Jan 26, 2011Mike Konczal

If you listened to Obama's speech, you would think that the recession is over, the financial crisis is taken care of and we can educate out of the rest. You'd be wrong.

There are three things you wouldn't have learned from the State of the Union last night. The first is embodied in the chart below. You wouldn't realize that employment is down about 5% from where it was 3 years ago, with millions of people are out of work, dropped out of the labor force, and underemployed. The second is that we have not yet hit the peak rate of foreclosures in this country. Last year 1 million properties were seized; this year an estimated 1.2 million will be seized. The last was that there was a  financial crisis in 2008, steps were taken to remedy it -- including what will be one of the signature legislative acts of the Obama administration -- and the current state of Wall Street is record profits.

Like Jamelle Bouie, I'm surprised by how fast we are moving past the current unemployment crisis. The Obama team has gone from the current to the Future, and must be expecting, or at least hoping, for a turnaround in job creation.

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The speech was well delivered. Although vague, it pointed to a kind of liberal supply-side theory that I think is important to highlight. Indeed, in a non-crisis time it would have been a great vision of the role of government in the economy. But right now we need the government to do different things.

Social Security cuts were not the centerpiece, which reflects excellent activism and writing across many different groups, including Strengthen Social Security, Dean Baker and CEPR, and many others. Though far from over, this is a good first step.

For those who think that better education is the way to get out of this mess, it's worth looking at data (from forthcoming Roosevelt Institute work) on the unemployment rate for 20-24 year olds with a BA (seasonally unadjusted, 4-month moving average):

To put that in words, young people graduating college with large debt loads are entering a brutal job market. Our colleges are no worse than they were in 2007, yet young people are struggling to find work even with strong college investments. Telling the American workforce that they aren't educated enough for the jobs of the future isn't going to actually reconcile with this data.

It's interesting to see how quickly forces are turning this into the new normal, pulling our attention away from the economic crisis. It feels like we are turning Japanese.

Mike Konczal is a Fellow at the Roosevelt Institute.

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