State of the Auto Industry
During the State of the Union Address President Obama singled out the auto industry for showing how his leadership has set the nation’s economy back on track.
If this is the best example of economic leadership the President can come up with then its time for new leadership at the top.
In the tradition of Politifact, if you dig deeper you’ll find the President exaggerated his accomplishment. For assessing the state of the union and his leadership skills, President Obama left out data crucial for an accurate judgement by voters.
What President Obama Said
In the State of the Union (SOTU) the President made these claims about the auto industry:
On the day I took office, our auto industry was on the verge of collapse… With a million jobs at stake, I refused to let that happen… Today, General Motors is back on top as the world’s number-one automaker. (Applause) …the entire industry added nearly 160,000 jobs.
… tonight, the American auto industry is back. (Applause.)
TARP Bailouts for GM and Chrysler
“Refused to let that happen” means that President Obama used TARP bailouts to save General Motors and Chrysler… the same TARP program used to bailout the big banks.
According to TARP’s Three Year Anniversary Report in October 2011, the total bailout money invested in the automotive industry was $79.69 billion.
Currently there is still $42.52 billion of that debt outstanding and the Treasury Department estimates a total loss of $14.33 billion.
Taxpayers took a shellacking from their TARP bailouts of GM and Chrysler.
The big banks have long since repaid their TARP loans with interest. Taxpayers made money off TARP from the banks… and there is still more coming in.
GM: The World’s Number-One Automaker?
Politifact rated President Obama’s SOTU claim a half truth because it included sales figures from a Chinese partnership contested both by automotive analysts and another automaker, Volkswagen, who finished 2nd overall.
In addition to that, former #1 Toyota – who is either 3rd or 4th this year depending on who you believe – fell from its lofty perch because of last year’s tsunami and floods in Thailand that seriously hampered its production. Toyota is the only major manufacturer last year whose sales fell. They fell by 6%.
What 160,000 jobs?
During SOTU the President says 160,000 new auto industry jobs were created, but does not say exactly what he means by that, nor what the time frame they were created. It is next to impossible to fact check.
Automotive jobs are tracked by the Bureau of Labor Statistics(BLS) two ways – manufacturing and retail.
When the President said “With a million jobs at stake” it kinda implies he is only talking about manufacturing jobs, given that a million is around the total number of manufacturing jobs there are in automotive.
The million is far, far less than the sum total of 2.3 million jobs in both auto manufacturing and automotive retail sales. But who knows what he really meant.
Given that uncertainty, it is best to look at both sectors separately.
The Real Numbers Speak!
Under durable goods, which includes both motor vehicles and parts, the BLS lists 684,500 jobs when President Obama assumed office in January 2009. As of December 2011 that number was 733,300 jobs (preliminary) … about 48,800 more jobs than when Barack Obama assumed office.
However, through no fault of President Obama, the low point in auto manufacturing occurred in July 2009 at 623,900 jobs. Since that time there has been an increase of 109,400 jobs.
The high water mark for auto manufacturing was 1,344,400 jobs hit in June of 2000. We currently stand at 611,100 FEWER jobs, a little more than half as many, than at the high water mark in 2000.
Bottom line… according to the BLS, there are about 178,000 fewer auto manufacturing jobs today than at the start of the recession.
Auto Retail Sales
Under retail trade, including motor vehicle and parts dealers, the BLS lists 1,659,500 jobs when President Obama assumed office in January 2009. As of December 2011 that number was 1,689,200 (preliminary)… about 29,700 more jobs than when Barack Obama assumed office.
However, through no fault of President Obama, the low point in auto retail jobs occurred in January 2010 at 1,582,900 jobs. Since that time there has been an increase of 106,300 jobs.
The high water mark in auto retail was 1,944,400 jobs in July 2005. We currently stand at 255,000 FEWER auto jobs than at the high water mark.
Bottom line… according to the BLS, there are about 182,000 fewer auto retail jobs today than at the start of the recession.
Declaring that “the American auto industry is back” is premature.
According to the BLS, there are 866,100 fewer jobs in auto manufacturing and retail than in their heyday.
There are approximately 360,000 fewer jobs today than at the start of the recession.
On the plus side, there are 78,700 more jobs than when President Obama assumed office in January 2009. There are 215,700 more jobs now than at the deepest depths of the recession.
Is the auto industry doing better today? Yes! Is it back, as President Obama said in the State of the Union? Absolutely not!
Drive around Detroit and stop into any bar and, no doubt, that assessment would be confirmed.
U.S. taxpayers are still left stuck for $42.52 billion in auto industry TARP bailout debt left over from GM and Chrysler. A significant amount of that will never be paid back.
When you consider that most of the auto industry bounce-back is do more to private sector market conditions than anything else, the TARP bailout losses are even more painful.
Comparatively speaking, Ford, who took no bailout money at all, is doing better by percentage of growth since the start of the recession than both GM and Chrysler.
Knowing this, how many of you now applaud the President’s auto industry leadership?