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Obama Says The Private Sector Is Fine, And He's Not Entirely Wrong

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President Barack Obama talks about the economy, Friday, June 8, 2012, in the briefing room of the White House in Washington.
President Barack Obama talks about the economy, Friday, June 8, 2012, in the briefing room of the White House in Washington.

By now you've probably heard about this awful gaffe President Obama made, calling the private sector "fine." Except from the old-fashioned standpoint of accuracy it wasn't much of a gaffe. The private sector is, in some ways, for lack of a better word, fine.

Obama, in his press conference Friday morning to talk about the economy and Europe and leaks and such, let slip that "the private sector is doing fine," a politically dumb phrase that his Republican opposition leaped on with glee, The Huffington Post's Jon Ward points out.

No doubt Obama could have picked better wording: The economy as a whole is not fine. But he wasn't trying to say the economy as a whole is fine. He was trying to say the private sector is fine. In fact, as lame and disappointing as all would agree this recovery has been, the private sector has kept it from being disastrous.

The U.S. economy is pulled by two mules, the government and the private sector. One mule, the private sector, may be a little thin, but it is actually doing some halfway decent pulling. The government mule, on the other hand, is dead and buzzing with flies. Relative to that mule, the private mule is indeed "fine."

For example: The private sector has created 847,000 jobs so far this year, an average of 169,000 per month, right above the 150,000 or so needed to keep the unemployment rate from rising. That pace has slowed to less than 90,000 per month in the past two months, for reasons economists haven't fully figured out yet. That's still not disastrous, but it's maybe one reason Obama should have picked a better word than "fine" today.

Still, the public sector -- federal, state and local employees -- has lost a total of 23,000 jobs so far this year, in contrast.

And since February 2010, when the current stretch of job growth began, the private sector has added nearly 4.3 million workers to its payrolls. The government sector has cut 502,000 workers from payrolls during the same period.

As Kevin Drum points out at Mother Jones, the private sector's annual job-growth rate of about 2 million workers per year is back to pre-recession levels. The government's job-cut rate is worse than it was during the recession.

Meanwhile, corporate profits are at record highs, for the Fortune 500 and for the economy as a whole.

These record profits are not translating to a booming job market, and they're certainly not narrowing the income inequality gap or ending poverty. The economy as a whole is still pretty far from OK, to paraphrase Marsellus Wallace. But it is not such a stretch to describe the private sector specifically as "fine."

In fact, the private sector is arguably doing better than you might expect, given the death of the government mule at the hands of Republicans in Congress, as Slate's Dave Weigel notes:

Republicans were pretty clear about this -- they wanted to shrink the public sector. That's their philosophy. Grow the economy, de-regulate, privatize services, and you can have higher overall employment with fewer people on the public teat.

If the private sector is really not "fine," then maybe the imposed weakness of the public sector is part of the problem.

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