Lincolnton Furniture Company closed abruptly this week just one year after it was hailed by President Barack Obama as an example of the recovering economy.
"We just didn't have any choice at this point," company financial officer Ben Causey said. "We needed more orders is really what it boiled down to. We thought they would materialize."
The closure comes on the heels of the latest jobs report that shows the unemployment rate in December remained at 7.8% and the underemployment rate stuck at 14.4% as more people give up looking for work altogether. The labor force participation rate, which measures the number of working age people (18-64) actively looking for work, continues to be a record low 63.6% according to the Bureau of Labor Statistics.
Both serve as reminders that, measured on the basis of jobs, GDP growth, and incomes, this has been by far the weakest recovery of the past 10 recessions. Since the recession ended, GDP growth has been 2.4% in 2010, 1.8% in 2011 and 1.7% in 2012 under Obama.
In fact, if the same base number of people from four years ago were still looking for work instead of dropping out of the work force, the real unemployment rate would be at 10.7%. Instead, many have been forced to switch to welfare, with Medicaid recipients now at a record high 70.4 million Americans, food stamp recipients at a record high 47.7 million Americans and disability claims at a record high 8.8 million Americans – keeping one-third of the country on means-tested welfare (excluding Social Security and Medicare).
According to the Obama administration, unemployment was supposed to be down to 5.2% by now after passing the $831 billion stimulus. So much for the near trillion-dollar leap of faith in the Keynesian "multiplier" effect of government spending.
At this pace of job growth, the U.S. won't return to pre-recession employment levels until after 2025, according to the Jobs Gap calculator from the Hamilton Project. If that proves accurate, then this recovery would be even slower than after the Great Depression.
The reason why economic recovery has been so weak is there is still no reason for the private sector to start spending the capital it's sitting on. Quite the opposite, with the capital gains tax being raised to 20% after the fiscal cliff deal, new taxes now being collected for Obamacare and an onslaught of new regulations coming from Washington (of which Obama waited until after the election to announce), investment, hiring and consumer spending looks to remain sluggish and low – keeping economic growth weak in 2013.
The private sector is where real economic recovery occurs and in this environment, it's almost impossible to establish a new business. Banks aren't lending, consumer spending isn't strong enough due to lower household net worth and stubbornly high unemployment, and regulations are stiffer than ever.
In fact, when questioned about the Lincolnton Furniture Company's shutdown, the owner's uncle responded, "starting a furniture business now is very difficult in this country."