In a hastily called press conference on Friday morning, Barack Obama seemed reluctant to make news, adopting his most professorial tone. But he managed to do it anyway when he said that "the private sector is doing fine." It was the quote that launched a thousand tweets; the Romney campaign almost immediately sent out a press release mocking it. Some even compared it to John McCain's disastrous statement that "the fundamentals of the economy are strong," made the same day that Lehman Brothers collapsed.
But while it's probably true that the remark will come back to haunt the president, facts ought to matter. Unlike McCain, who was obviously wrong about the economy, Obama isn't totally off base. Here's the rest of his comment:
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 kind of flexibility of the federal government in dealing with fewer revenues coming in.
The president also noted that corporate profits have hit record highs.
Via Talking Points Memo, here's the chart that backs him up:
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As the graph shows, the growth of private-sector jobs is slower than anyone -- Obama, Mitt Romney, and certainly the millions of unemployed Americans -- would like. Voters will have a choice in November of who they think can accelerate that growth more. But the fact is that private-sector hiring has seen consistent, inexorable growth since the beginning of 2010 or so. The unemployment rate would be lower than it is if not for state and local governments laying off many workers as their budgets shrink. Most states and towns are obligated to run a balanced budget, unlike the federal government. Many of them have seen tax revenues nosedive as their residents lost money during the recession. They've also lost key assistance from the federal government.
Obama wants Congress to put money toward rectifying that problem. Liberals and conservatives disagree about whether that's worthwhile. But it's clearly the case that shrinking payrolls at state and local governments are a major drag on the nation's employment, while private payrolls are reasonably healthy.
As several readers helpfully pointed out, I mistakenly said "public sector" in the original headline, which has been fixed. Also, here's an additional data point from the May jobs report: While the private sector added 82,000 jobs, government lost a total of 13,000.
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