Ringing The (Taco) Bell

This year, Taco Bell is going to be experimenting with a new approach to recruiting qualified restaurant managers:  in certain labor markets, it has announced it is willing to pay an annual salary of $100,000 to managers of company-owned Taco Bell stores.

taco-bell-kiosks-digital-strategy-qsrThe Taco Bell initiative is a response to a very difficult labor market for employers.  With the current unemployment rate at historic lows — the product of a strong job market and lots of aging Baby Boomers moving into retirement, among other circumstances — there just aren’t many good candidates out there.  So Taco Bell is going to test, in certain markets in the Midwest and Northeast, whether paying a $100,000 salary brings in a better crop of candidates.  That represents a significant increase over the current starting salary for Taco Bell store managers, which ranges from $50,000 to $80,000.

The Taco Bell manager initiative isn’t the only evidence of a tight job market and wage pressure.  The article linked above notes that other companies operating in the fast-food restaurant market — typically the classic source of low-paying, entry-level jobs — are reporting wage pressure affecting their margins.  Just this week the Bureau of Labor Statistics reported that in the fourth quarter of 2019, “median weekly earnings of the nation’s 118.3 million full-time wage and salary workers were $936, an increase of 4.0 percent from a year earlier ($900).”  The BLS statistics show wage growth in 2019 above the rate of inflation (which was about 2 percent) in all age categories except workers between 55 and 64, with workers in the 25 to 34 age range showing especially strong wage increases.  And the BLS wage statistics indicate the labor market is particularly good for women, with median weekly earnings for women in 2019 up by 6.2 percent.

Imagine — making a six-figure income as the manager of a Taco Bell!  Your parents never would have thought it was possible.

Testing The Impact Of Free Money

Starting this week, the government in Finland is going to do something interesting.  For two years, it will be giving free money — about $590 a month — to 2,000 unemployed Finns.

free-moneyIt’s an effort to test the theory of “basic income,” and also an attempt to try to streamline Finland’s social welfare system, where benefits vary depending on a person’s status and change whenever the status changes.  The concept of basic income posits that paying people just for being alive will make sure that no one falls through the cracks.  And the Finnish government also is hoping that the experiment will provide some evidence of just what unemployed people will do if they are given money with no strings attached.  Proponents of basic income hope that the money spurs unemployed people to start their own businesses and be more entrepreneurial.  The skeptics expect that the lucky 2,000 Finns will spend a lot of time on their couches, watching TV and eating junk food.

I’m not sure how the free money will affect the 2,000 recipients; predicting the reactions of individuals is never easy.  I don’t think $590 a month is all that much money — for example, it’s about a third of what salespeople in Finland earn, according to this chart — but if Finland has a robust social safety net, as many northern European countries do, it might be enough to allow somebody to eke out a couch-bound, video game-oriented life with a roommate or two and some generous parents.  It doesn’t seem like it would be enough money to allow people to start a business, learn a new trade, or do some of the other positive, poverty-ending things that some advocates are forecasting.  My guess is that if the unemployed folks had the drive, moxie, and gumption to start a new business, for example, they probably wouldn’t be unemployed in the first place.

No, I think the more predictable response will come from the people who aren’t getting that $590 a month for the next two years.  Somebody is paying the taxes that fund the “free money” pot, and I’m guessing they won’t exactly be happy to be paying somebody else to simply exist.  And if even a portion of the 2,000 start their own businesses, some of the taxpayers no doubt will wonder why they didn’t get the free money that would allow them to pursue their dreams.  When government is picking the lucky few, there is bound to be some resentment.  Pretty soon you end up with a lot of people wanting that free money from the government, the government bowing to popular demand, and perhaps not enough people who are working and paying the taxes that provide the free money in the first place.

All of which begs the question:  how could the “basic income” model be sustainable in the real world?  Thanks to Finland, maybe we’re about to find out.

Out Of The Labor Market

Richard had a really good piece in Friday’s Florida Times-Union about Floridians who have dropped out of the labor force.  It’s an effort to explain, through the unique, personal stories of individuals, an important long-term trend in America:  declining participation in the labor force.

I think it’s a really good — and useful — piece of work because it captures the frustration, depression, and rejection that productive people feel when they lose their jobs and cannot get hired somewhere else, despite making every effort to find a new position with a new employer.  They want to work and know they could make a contribution, but they simply don’t get the opportunity.  You can sense the angst they feel in quotes like this from one woman who has looked high and low for work without success:  “Why is it that after five years of looking, nobody wants me?”  Is it any wonder that so many become discouraged and simply stop looking — or take an early retirement?

Statistics can be useful for some things, but they simply can’t capture the true story of people who are unemployed and unable to find work.  That’s why a story like Richard’s piece is valuable — it brings a big national development down to local, human terms that people can understand.

Euro Zone Danger Zone

With all the bad news around the world lately — from ISIS savagery to North Korean nuttery, from Russian power plays in Ukraine to Chinese saber-rattling in the Pacific, from the Ebola outbreak in west Africa to Boko Haram mass kidnappings — nobody’s paying too much attention to Europe.  That’s unfortunate, because Europe is a mess right now.

Economically, Europe is a basket case.  In the second quarter of this year, Germany’s economy — the largest on the continent — shrank by 0.2 percent.  The most recent data indicates that business growth continued to slow in August.  In France, the economy is completely stagnant, producing no growth for several quarters while unemployment is above 10 percent.  The French economy minister resigned yesterday in a public disagreement with the country’s very unpopular President about whether France should follow austerity policies or policies that funnel government money directly to households; the economy minister said he felt compelled to speak out to try to avoid the European Union’s “descent into hell.” 

IMG_5596The unemployment situation in Europe is terrible.  Statistics presented by the European Central Bank president at an international conference last week are daunting — they show European unemployment growing while American unemployment is declining and indicate that the recession that hit the world in 2008 really hasn’t ended in the Eurozone.  The statistics also show that people who aren’t highly educated are losing their jobs by the truckload and that jobs are vanishing in the business sectors that traditionally employed less educated people — like construction and heavy industry.  The service sector is holding steady, which means that if you’re looking for a job in the Eurozone and you don’t have advanced degrees, you’re lucky to get a position as a waiter.

When economies fail and bitter people can’t find jobs to fill their time and feed their families, political and social unrest follows closely behind.  It therefore shouldn’t be a surprise that we are seeing a deeply troubling increase in anti-Semitism in Europe, from public protests triggered by the Israeli-Hamas fighting in Gaza to attacks on synagogues and social media hate speech.  The fact that some Europeans are returning to virulent anti-Semitism of their forefathers indicates that the EU initiative really hasn’t materially changed a continent where prejudices run deep.

The economic, political, and social situation in Europe is a toxic mix.  Other crises have distracted attention from the various Eurozone woes, but we shouldn’t ignore what’s happening across the Atlantic.

When College Graduates Move Back With Their Parents

Last week Gallup released some survey data that deserved more attention than it actually received. The survey indicated that, in the United States, 14 percent of adults aged 24 to 34 live with their parents. What’s more, 51 percent of young adults aged 18 to 23 live with their parents. Put them together, and almost one-third of American adults under the age of 35 live with their parents.

As the Gallup report linked above indicates, there are many potential causes for this phenomenon. Some young adults, for example, may be helping to care for their aging or infirm parents. But deep down, we all know what the real cause is — the job market for young people is terrible, and many college graduates have obtained their diplomas at the price of a huge amount of debt. If you can’t get a job that covers the cost of housing, allows you to service your student loans, and leaves a little money left for living expenses, you don’t really have a choice. Inexorable financial necessity drives the decision.

The reality exposed by the Gallup survey is why so many of us have difficulty accepting the gradual decline in the unemployment rate as real evidence of an improving economy. We all know too many smart, capable, motivated college graduates who have had to move back in with their parents to try to make ends meet while they look for a job. It’s not what they — or their parents — envisioned when then went off to college.

The Gallup piece ends with a paragraph that begins: “A key question is to what extent those living at home are better off or worse off than their contemporaries who are out on their own, and what implications that has for society in general and the economy in particular.” Gallup promises to explore this question in a future report, but I think I can predict the findings — young adults who live with their parents probably eat better but are less satisfied than their friends who have found a job and are living on their own. People want to be independent, and the surest indication of independence is maintaining your own place. Mom’s home-cooked meals are nice and the comforts of home are pleasant, but young people who have to move back into their old rooms to make ends meet have to be frustrated and worried about their careers and their futures.

The Jobless Jobs Report

After a few months of encouraging jobs growth, the December employment report was a bummer. It indicated that the economy added only 74,000 jobs — far below the 200,000 that most economists were forecasting. Even though the job growth news was disappointing, the unemployment rate declined, because another 347,000 Americans stopped working or looking for work.

The economists think that December’s job growth number was an aberration that may have been caused by cold weather or other temporary conditions. Let’s assume they are right — although economists seem to be wrong in their forecasts much more often than they are on the money — and the job growth returns to the 150,000 to 200,000 new jobs per month rate we saw for most of 2013. Even if that happens, I think the focus on the job growth number is misplaced.

We need jobs, to be sure — but we also need to have people working and looking for work, which is why the 347,000 number is the more important one. Since the Great Recession began more than five years ago, millions of people have dropped out of the labor market, and the percentage of Americans who are working is at its lowest point in decades. Why have those people given up? What are they doing with their lives? How do we get them back into the job market?

These are not abstract questions. The viability of programs like Social Security depends on a healthy job market in which working Americans are funding the payments to those who are retired or otherwise eligible for benefits. Every person who stops working because they cannot find a job won’t be making that contribution — and the long-term viability of the Social Security system and similar programs becomes more perilous.

The loss of the contributions of millions of expected wage-earners inevitably will have a dramatic impact, and if we can’t figure out how to get people to reengage in the job market, we can expect to see dire predictions of the consequences for Social Security benefits. That inevitability is deeply concerning to us forty- and fifty-somethings who have been paying into Social Security for decades and hope that it is still around when, years from now, we reach the point of retirement.

The Latest (Sigh) Jobs Report

Yesterday the August jobs report came out.  It was another in a series of “disappointing” economic reports — to the point where journalists covering employment numbers must have had to hit their thesauruses to try to find new synonyms for “weak,” “soft,” and “discouraging.”

In August, the economy added 169,000 jobs.  It’s a mediocre number, following a series of mediocre jobs growth numbers.  The unemployment rate dropped, but only because we don’t take into account people who have just stopped looking for work.  As the New York Times story linked above reports, the number of people participating in the labor force — i.,e., either working or looking for work — fell to its lowest level since 1978, since the Jimmy Carter administration.  And, the job creation estimates for June and July were revised downward.

There are concerns about the quality of the jobs being created.  Many of the new jobs are part-time positions in the retail and food services where the pay per hour is lower than in salaried jobs.  More then 7.9 million Americans are looking for full-time jobs but are only able to find part-time work.

The analysts react to these reports by debating whether this latest glimpse at a lame economy will cause the Federal Reserve Board to modify its monetary policies, and how the stock market will be affected.  And who knows?  Perhaps President Obama will declare, for the umpteenth time in his presidency, that he is ready to focus with laser-like intensity on jobs, jobs, jobs — and hope that no one recalls that his previous pivots to the terrible employment situation did absolutely zilch to ease the angst of people who can’t find work.

As for me, I try to remember that behind each employment statistic there is a human story of suffering and embarrassment, of people who can’t provide for their families and have seen their dreams explode in a blizzard of unpaid bills and urgent notices from creditors.  Why isn’t their terrible predicament more of a priority for President Obama and Congress?  Isn’t it time that we tried a different approach that might actually help them to find a good-paying job?

We All Could Use Some Good News — But Is The New Unemployment Report Really Good News?

Today the Labor Department announced that the unemployment rate has declined to 7.8 percent.  It’s the first time the rate has fallen below 8 percent since President Obama was inaugurated in January 2009.

Unfortunately, the economy only created 114,000 new jobs last month, which is just about that number of new workers who enter the job market every month.   Although the reported jobs creation number was small, the unemployment rate dropped sharply — from 8.1 percent to 7.8 percent — because the number of people who said they were employed rose by 873,000.

It being  the middle of an election campaign, you’d expect the statistics to become a political football, and that’s exactly what has happened.  President Obama says the report shows the economy is on the right track and we shouldn’t turn backMitt Romney says the economy isn’t producing enough jobs and that our current economy isn’t what a real recovery looks like.

I’m happy that the unemployment rate has fallen below 7.8 percent, but I’m more inclined to agree with Mitt Romney than the President on the import of the numbers.  An economy that creates 114,000 jobs is basically treading water, and a 7.8 percent unemployment rate is unacceptably high and nothing to strut about.  And, not being a government statistician or economist, it’s hard for me to reconcile the report that only 114,000 jobs were created with a surprising, 873,000-person increase in the ranks of the employed.  Is the difference people who are working at home, or working part-time, or something else?

I can only go with what I am seeing here in central Ohio, and I’m not seeing signs of a budding recovery, significant hiring, or great optimism on the part of my fellow citizens.  I hope I’m missing those signs — but until I see them I’m going to reserve judgment and see if we get more information about where those 873,000 newly employed people came from.

Hey Harry, Mitt Paid Taxes!

Today Mitt Romney released his 2011 tax returns.  They show that the Republican nominee earned more than $13.5 million — mostly from investments — and paid $1.9 million in taxes.  He has his wife also gave generously to charities.

In addition, Romney also released a summary of his taxes going back to 1990.  The summary reported that, during the period from 1990 to 2009, the Romneys paid taxes every year, with an average annual effective federal tax rate of 20.2 percent.  Romney has now provided information about 23 years of tax returns, including releasing the tax returns themselves for 2010 and 2011.

Let’s not forget that the abominable Harry Reid claimed back in August that an anonymous source had told him that Mitt Romney had not paid taxes for 10 years.  It was appalling that the Senate Majority Leader would rely on an unnamed source to launch such serious and slanderous accusations, which have now been shown to be false.  Do you think there is any chance that Harry Reid will apologize to Mitt Romney for making such reckless and unfounded accusations?  That’s what any decent person would do.  Unfortunately, any person of character would never have made the unsupported accusations in the first place, so I wouldn’t bet on old Harry doing the decent thing.  Instead, he’ll just endure another blow to whatever shreds of credibility he might still possess.

I hope Romney’s release of his tax returns takes that silly issue off the table, and lets the candidates and the American public focus on the big issues in the race — like who is better equipped to get our economy going, and how we can get people back to work and bring this unending recession to a long-overdue end.

President Obama Gets The Last Word — For Now

President Obama brought the Democratic National Convention to a close last night with a much-anticipated speech accepting his party’s nomination for re-election.  As always, the President gave a well-delivered address that addressed concepts that have become familiar from the 2008 campaign and his four years in office, and that sought to stir some of the same emotions that made his 2008 a crusade for so many people.  The burden for the President, I think, is that every speech he makes is compared to some of his prior addresses to rapturous audiences; for many it will be hard for him to approach, much less equal or exceed, his efforts four years ago.  He has set a high bar for himself.

The President’s speech reminded me of President Clinton’s speech the night before in that it was heavy on brief references to a host of issues and policy concerns.  The President mentioned a number of matters — job training, renewable energy, investment in education, climate change, women’s health, oil and gas exploration, and countless others — and then moved on quickly.  The speech included lots of round-number goals (“100,000 math and science teachers” or “a million new manufacturing jobs”) and future dates (“over the next decade”).  It was as if the President wanted to touch every conceivable base.  It certainly seemed that he did so, but talking, however briefly, about disparate issues makes it more difficult to knit together and present broad, unifying themes.

The President acknowledged the difficulties in achieving his promises from the 2008 campaign, without getting into specifics of discouraging data on  unemployment, foreclosures, and the federal deficit.  He spoke of “hope tested by political gridlock,” said he never said it would be easy, called our recent economic issues the “Great Recession,” and added that it is clear that it will take more than a few years to solve the problems.  He referred to his failings, and said he was moved by the hope that ordinary Americans gave to him, not the other way around.

The speech was more pointed in its criticism of his opponent than you typically hear in addresses by incumbents, who often attempt to appear above the fray and largely ignore their adversaries.  He said Republicans don’t want Americans to know their plans, which consist only of lower taxes and reduced regulations as the remedy for every malady.  He noted the lack of foreign policy experience of Mitt Romney and Paul Ryan, accused them of being in a “Cold War time warp,” and chided Romney for purportedly “insulting” Great Britain, “our closest ally,” during a recent visit to that country.  From such remarks, I think we are safe to say that we are in for a hard-fought, and probably personal, campaign.

The President sought to address the charge that he views more government as the solution to every problem.  Not all of our problems can be solved by government programs, he said — but our problems can be solved.  Thereafter, however, every proposal and solution he offered seemed to involve some form of government program, benefit, or subsidy.  He talked about “nation-building here at home” through construction of roads and bridges, which sounded like a pitch for another “stimulus” effort.  It’s tough for President Obama to argue that he isn’t for bigger government, because he obviously believes that, as he says,”government has a role.”  That belief makes it difficult to convince him that some government programs don’t work and that government spending often is wasteful.  Last night, at least, there was no talk of eliminating any specific programs or spending as part of a plan to balance our budget.

The overarching challenge for the President is that, as he observed at one point during his speech, “I am the President.”  Unlike 2008, he has a performance record to explain and defend, and it is hard to sound lofty themes when your opponents are constantly bringing the debate back down to earth with statistics about unemployment, home foreclosures, or declining median family incomes.

This year the Democrats had the luxury of following the Republicans, which gives President Obama the last word — for now — but Republicans will have their say soon enough.  For all of their apparent differences, President Obama and Mitt Romney do seem to agree on one thing:  to use President Obama’s formulation from last night, this election offers the “clearest choice in a generation” between candidates with “fundamentally different visions of the future.”  With the conventions done, we now move into the final phase of this ridiculously long campaign — a time of more rallies, more attack ads, and eventually debates that will let the competing candidates go toe-to-toe.

The Double-Edged Student Loans Sword

Student loans have been a focus of many of the speeches at the Democratic National Convention.  The speakers obviously feel that talking about “making college more affordable” through more student loans is a winning issue — but is it?

To be sure, at one time going to college, and especially being the first person in your family to do so, was viewed as a sure way to get ahead and realize the American Dream.  Is that still the case?  As the scope of student loans has expanded — and as such loans have been used to finance educations in traditional colleges, and trade schools, and for-profit schools, and as all such schools seem to increase their tuition requirements on an annual basis — many have come to see student loans as less a gateway to opportunity, and more as a gateway to lifelong debt.

The statistics about the debt load related to student loans are striking.  Believe it or not, the Treasury Department is garnishing the Social Security payments of more than 115,000 senior citizens — to pay off their student loans.  More than 2 million people 60 and older have student loan debt; I know people who are hoping to pay off the loans they took out to attend college and law school at some point in their 50s.  As the article linked above indicates, younger Americans are carrying enormous amounts of student loan debt, debts that have affected the choices they are making about their careers and their lives, debts that have affected their parents who agreed to guarantee the repayment of those loans, and debts that may even make it impossible for the students to later get a mortgage for their purchase of a home.

How much has the easy availability of student loans encouraged universities, trade schools, and for-profit colleges to constantly increase their tuitions, rather than looking for ways to reduce costs?  How are students who borrowed heavily to go to college, or graduate school, or both, to manage in an economy that isn’t producing enough jobs that will allow them to comfortably repay those debts?  How many individuals who took on such loans now regret that decision?

Going to college and receiving a higher education is great, but you need income to repay debts — and that means getting a good-paying job.  If a struggling economy isn’t creating such jobs, student loans can quickly go from a blessing to an albatross.

An Administration In Need Of A Cleveland Sports Fan

People on different parts of the political spectrum can argue about whether President Obama’s approach to the economy has been wise or foolhardy, and whether it’s avoided even more misery or is making things worse, but I bet we can all agree on one thing:  the Administration’s forecasts of the impact of its policies have turned out to be wildly optimistic.

The Administration predicted that the stimulus bill would move unemployment rate markedly lower; that didn’t happen.  It said we would have “recovery summers” in 2010 and 2011; that didn’t happen either.  Its forecasts of budget deficits, the costs of legislation like the Affordable Care Act, the losses likely to be incurred as a result of the GM bailout, and the success of “green energy” investments in companies like Solyndra also have been way off base.  (We can argue about why the forecasts haven’t been realized, and how much of the blame should be allocated to the Bush Administration, “obstructionism” by House Republicans, or other factors.  My point is simply that the Administration’s projections have consistently fallen far short of the ultimate reality.)

That’s why the Administration should hire a Cleveland sports fan to review future forecasts and predictions.  Anyone who lived through The Drive, The Fumble, and the Indians’ loss in the 1997 World Series knows that overconfidence kills and the wise course is to grimly steel yourself for the worst imaginable misfortune.  The fan would have counseled our newly elected President to dial back the projections of great success, build lots of pessimistic assumptions into the predictive models, and talk endlessly about the extraordinarily difficult challenges presented by the bad economy.  If actual performance then exceeded the dramatically reduced expectations, the difference could be chalked up to the fact that the President’s programs have been even more successful that we hoped.

I wonder if the hiring of a snakebit Cleveland fan hasn’t happened already.  After the awful job creation statistics of the past few months, expectations were reduced to zilch.  When the latest statistics were released yesterday, and the creation of a measly 170,000 or so new jobs was announced, people acted like it was a cause for celebration.  It was a very Cleveland moment.

The Economy Slows, And The Anxiety Grows

We got more bad economic news today.  The Commerce Department reported that the economy grew by 1.5 percent in the second quarter of 2012.

These figures are often revised, and perhaps this announcement will be modified in the future.  And 1.5 percent growth is better than flat-lining, or actual economic contraction, but that’s about the extent of the positive things you can say about this news.  Such economic growth is measly by any measure.  It’s not enough expansion to create real employment opportunities for the new people entering the job market — good luck finding work if you are someone who graduated from college this year — and it basically means that the economy is in a stall.  We’ll just have to hope that the stall ends with upward movement, and not a nose dive into new, double-dip recessionary territory.

I know some people think that Republicans are rooting for economic failure.  I’d like to think that isn’t the case — people are really suffering, and are growing increasingly worried — but I also think it is irrelevant.  Whether Republicans are hoping for economic failure or not, economic failure is what we currently have.  If there are rays of hope on the national horizon, outside of pockets of growth like the natural gas-fueled boom occurring in eastern Ohio, I haven’t seen them.

Bad News, On The Road

Driving from Columbus to Indianapolis yesterday, you could see the signs of America’s ongoing economic struggles, without having to look very hard for them.

It’s a straight shot from Columbus to Indianapolis, on I-70 West.  That’s one of our main east-west highways, linking cities like Columbus, Indianapolis, St. Louis, and Denver.  When the economy is really cooking, the road is packed with long convoys of semi trucks that can make the drive a real pain.  In America’s heartland, trucks are the true wheels of commerce.  Yesterday, there was some truck traffic, but not that much — certainly not as much as in boom times.

Another highway-oriented economic indicator is billboards.  The number of billboards dotting the I-70 roadway reflects its status as a major transportation artery.  Yesterday, many of the billboards were available for lease, which suggests that some companies may have cut back on their advertising budgets or that the businesses that formerly used the billboards have gone under.

From what I saw on my road trip, I’m not surprised by the continuing bad news — like yesterday’s report of higher than expected filings of new joblessness claims.

The Meaning Of “Fine”

President Obama stepped into a controversy yesterday, when at a morning press conference he said about the economy:  “The private sector’s doing fine.”

Mitt Romney and other Republicans, ecstatic to be handed such a plum, jumped all over the statement, citing statistics like the unemployment rate and the number of home foreclosures to demonstrate that the economy is not doing fine and to portray the President as out of touch.  By the end of the day, the President was in wholesale retreat, saying:  “it is absolutely clear that the economy is not doing fine.”  We’ll have to see whether this incident is just one of those silly Washington, D.C. tempests in a teapot, or whether the President’s remark strikes a deeper chord with the American people.  (In that regard, the President’s constant fund-raising activities with high-money donors and Hollywood stars probably isn’t helping him dodge the “out of touch” label.  But who’d have thought that Mitt Romney, of all people, would take a crack at depicting President Obama as “out of touch” with ordinary folks?)

For now, though, I’d like to just pause for a moment to think about word choice.  “Fine” is a pretty elastic word.  At our firm, some partners use it to describe associate performance that is minimally adequate — a kind of air quotes “fine” — whereas others use it as synonymous for “good.”  Coin collectors will tell you that “fine” is in the top half of the scale — better than poor, fair, good, and even very good, but not at the extremely fine or mint level.  What meaning did the President intend to convey?  “Fine” as in people are not walking around wearing barrels and selling apples on the streets, or something else?  Given his later retraction of sorts, we’ll probably never know.

I’ll give the President the benefit of the doubt that he was using “fine” in a way that is consistent with our current economic reality; I don’t think it’s fair to seize on one word out of the thousands he speaks every day.  I also think what he said immediately after saying that the private sector is doing “fine” is more significant, anyway.  He went on to add:  “Where we’re seeing weaknesses in our economy have to do with state and local government, oftentimes cuts initiated by, you know, governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don’t have the same flexibility as the federal government in dealing with fewer revenues coming in.”

There’s no mistaking the meaning of that statement; he thinks we need to spend more on public employee jobs in order to help our economy.  I could not disagree with him more on that point — and I think that, given recent election results in Wisconsin and California and elsewhere, that is where the President’s views might truly be “out of touch” with those of the majority of Americans.