President Obama’s top economic adviser, Austan Goolsbee, is leaving the administration to return to the University of Chicago, the White House announced Monday night. It’s odd timing (or maybe not) given that nearly every bit of economic data that has come out in the last two weeks has been negative. There is now a very real chance that the U.S. could fall back into recession. The housing market is crippled and prices are still falling. Consumer confidence is at levels not seen since last year, and spending (which makes up 70 percent of our economy) is lethargic. Manufacturing surveys (a good indication of future growth) are plummeting. And given last Friday’s jobs numbers – analysts had predicted 175,000 but we got 83,000, which is historically unprecedented at this stage of a recovery – it’s not at all an exaggeration to say we’re having a full blown employment crisis.
All of this is happening at a time when the global economy is in worse shape than it was back in 2008, before the financial crisis began. Europe is in the middle of a debt crisis, and the emerging markets are slowing, in part because they are worried about all the hot money that has been flooding their markets (which is itself in part a fallout from our own quantitative easing programs). So, it’s odd that a man who has structured and championed so many of Obama’s policies is choosing this moment to get out of the crisis management business. Obama praised Goolsbee, saying “over the past several years, he has helped steer our country out of the worst economic crisis since the Great Depression” and noting that the economy is still growing and creating millions of jobs. Well, sure, it’s growing – barely – but as for job creation, we’re not even holding ground, as witnessed by the unemployment rate ticking up from 9 to 9.1 percent in May.
Let me stress that I don’t believe this is an Obama specific problem – the administration has done a lot to move the economy forward since 2009, though they could be doing more right now. And I certainly don’t think the Republicans, with their obsessive focus on debt rather than growth, could have done any better. But this isn’t the time for the White House to be giving up on economic management, which is what seems to be happening. There’s a certain head in the sand quality to the discussions in Washington at the moment. The White House’s official growth estimate for 2011, which is 3.1 percent, is out of line with the consensus estimates of 2.6 percent. It’s clear that the administration wants to start turning responsibility for growth over to the private sector. What’s not clear is how and why American companies will start unlocking the $1 trillion currently on their balance sheets to hire workers in the US, when the majority of growth, as well as more favorable market dynamics, exist overseas. For more on that, and how we can move out of the current crisis, check out the print edition of TIME later this week.
