"Where’s that 5% unemployment rate Obama promised by now?"

By James Pethokoukis, Mar. 27, 2014, AEI

On the surface, the July jobs report — the unemployment rate dipped to 7.4% last month thanks to a shrinking workforce as the economy added a disappointing 162,000 net new payrolls — is just another dismal data point in America’s “new normal” recovery. But it’s also an important milestone and metric for judging the Keynesian fiscal experiment known as Obamanomics.

In January 2009, Team Obama economists put together a report – half quantitative analysis, half sales pitch — outlining the potential economic impact of the proposed $800 billion stimulus. (See above chart from that report.) If Congress passed the plan, the report forecasted, the economy would generate enough additional demand, output, and employment that two big things would happen:

First, the unemployment rate would never reach 8%. Unfortunately, we hit 10% unemployment in October 2009. Failure number one.

Second, the unemployment rate would return to its long-term “natural rate” of 5% by July 2013 (a jobless rate, it should be noted, above the low points of the Bush and Clinton presidencies). Labor markets would be back to peak health. The Great Recession would truly and finally be over.

Mission accomplished by this jobless report.

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