Employment improvement? I hate to say "I told you so," but...

Todays Washington Post reports:

"...The job market remained in a deep funk in December, according to a government report Friday showing that employers view the economic recovery as too weak and too fragile to begin hiring again on any large scale.

The pace of layoffs has slowed sharply in recent months, but businesses still cut 85,000 net jobs in December, the Labor Department said. The unemployment rate was unchanged at 10 percent, but economists suspect this is only because hundreds of thousands of frustrated workers stopped looking for jobs..."

This, in spite, of the Obama administration and clueless reporters cheering the November figures, which suggested that Unemployment fell from 10.2% to 10%, thus signalling "The Recovery."

We immediately commented, on Dec 5:

"...Of those who found employment, 55% found employment in Temp Hiring Agencies. In other words, these are temporary positions. It does not reflect a new confidence on the part of business calling back workers or expanding; rather it reflects the continued fear that businesses have and their reluctance to hire..." The Christmas season is over, and these Temp jobs are ending.

As far back as August 8th, we warned,

"The Unemployment rate is the percent of Americans who are out of work AND ACTIVELY SEEKING work. After 18 months of recession, many Americans have given up for the time being. They have adjusted to life at home, or life off the books, or a single-income in a formerly two-wage earner home. Accordingly, they are no longer considered in the work force, and no longer counted in the Unemployment figures. So, if there are 100 people in the 'labor force,' and 10 are out of work, that's a 10% Unemployment rate. If 5 of those people out of work give up looking, the Unemployment rate is calculated to be 5 unemployed out of 95 in the labor force, which is only a 5.2% rate. Voila! A lowered rate - even though the same number of people are out of work. Similarly, the homeless - which have grown under the foreclosure spate in the last 18 months - are *NOT* considered "Unemployed" because they are no longer considered in the Labor Force. When they lost their job, they were unemployed. When they lost their home and began life in their cars or on the street, they were magically removed from the Unemployment figures..."

Sigh.......

"Good" news on the Unemployment Front? Not even close...

One of the most frustrating aspects of our modern culture is the superficial, misunderstood, and unquestioned reporting of economics statistics by the mainstream media. As an Economics teacher, I am constantly asking my students to 'dig deeper' and uncover the real data under the cliche-ridden news reports, and today was no exception.

This morning the media hailed the apparent reduction in the unemployment rate from 10.2% to 10%. Accepting those figures at face value, headlines all over the web and on the television excitedly asked, "Have we turned the Corner?!"

Much to their chagrin, the answer is a non-negotiable NO.

Here are the facts behind that supposed 'reduction' in Unemployment (all facts easily ascertainable from the report itself, if they would read further than the equivalent of a tweet...)

1) The number of Americans out of work long-term - 27 weeks or more actually ROSE to 5.9 million, the highest number since 1948. Only the very short-term jobless rate (less than 14 weeks) decreased, and that due largely to temporary seasonal retail hires.

2)Of those who found employment, 55% found employment in Temp Hiring Agencies. In other words, these are temporary positions. It does not reflect a new confidence on the part of business calling back workers or expanding; rather it reflects the continued fear that businesses have and their reluctance to hire. Worse, it means that these newly-Temp-hired workers are almost unanimously worse off than they were in their previous jobs, because few (if any) Temp agencies offer benefits such as health insurance or sick days, and they certainly do not offer any long-term job security or comparable wages.

3)The current rate excludes the 9.2 million workers who, threatened with the loss of their home, shut-off of utilities, or lack of basic food and fuel, took jobs at lower paying rates using less-efficient skillsets than they they had before. As soon as someone takes a job - even a part-time, poorly-paying job - they no longer count in the unemployment rate. When these people are added into the rate, however, the total amount of Unemployment plus "Under"employment now exceeds 17% of the American workforce, the highest on record. [note: this statistic was not kept during the Great Depression, which was admittedly worse. That's hardly a consolation, though...]

4)Much has been made by liberals in the past that the poorest families are single-parent headed families headed by women. These same liberals should look at the demographic breakdown of the current unemployment rate, because the numbers border on frightening: In Female Head of Household families - already one of the poorest per-capita groups in America - the unemployment rate has increased to 11.4%.

The only thing to note in this report is the abject failure of both Fiscal Policy and Federal Reserve operations in relieving the current economic meltdown.

GDP up 3.5%? Obama's Hollow Cheerleading....

Apparently, we're supposed to pop the champagne corks and celebrate: GDP is up 3.5%, the recession is over, and the Recovery has begun. At least that's what the prObama Media outlets and White House are telling us.

My ECO 101 students could do a better job analyzing that statistic than most of the talking heads currently reporting it.

GDP (Gross Domestic Product) is a measure of all the goods and services created within a society's economy. Due to the work of noted Economist Arthur Okun, we know that GDP and Employment move in the same direction: when Employment increases, GDP increases, and vice versa. After four or five quarters of negative GDP, an increase of 3.5% would normally be a welcome sign. Except in this case, the figure is highly deceptive and manipulated, for the following reasons:

1) While GDP increased 3.5%, Consumer Spending - purchases by you and me - decreased by .5% AGAIN. In other words, the increase in purchases of goods and services did NOT come from "the people." Our spending fell. Rather, this spending came from the Federal Government as it purchased flashy orange signs to erect around the country proclaiming that our tax dollars were at work.

2) This additional spending was a one-time shot in the arm by the government. Does the White House and Congress expect to authorize 787 Billion every quarter to keep that up? Much of the increase in spending was in the "Cash for Clunkers" Program....which is now over, and which did not create a single job anywhere.

3) The White House claims that One Million jobs were saved or created through the stimulus. Since the stimulus was 787 Billion, that amounts to $787,000 tax dollars (not including future interest) spent per job. I would rate that as a FAILED effort.

4) The White House also claims that most of these jobs were in Construction and Education. How Convenient...construction jobs are considered highly seasonal, and when these workers lose their jobs in the winter, they are often excluded from the unemployment figures, which are usually presented as "seasonally adjusted unemployment" figures. The White House is now *counting* these jobs when they are created to credit the Stimulus Package, but you can bet these job losses will be *excluded* when the winter unemployment figures are released because they will be 'seasonally adjusted.'

5) Education, while important, doesn't create products or jobs. Saving jobs in education may ingratiate Obama to teacher's unions, but this sector does not create products or create wealth in the economy as other sectors do. It is no surprise that while GDP increased, Unemployment increased to 9.8%, and most economists expect it to hit double-digits this month - a month when pre-Christmas hiring would normally reduce this figure.

With unemployment increasing and consumer confidence and purchases falling, the 3.5% GDP increase is a make-believe number based on the Federal Government maxing out it's credit cards with few places left to turn when they come due.

Unemployment Figures: The Economy has NOT turned around

Some have heralded the "good news" that the Unemployment rate has dropped from a horrific 9.5% all the way down to 9.4% (tongue planted firmly in cheek). This, according to the Obamanauts, shows us that things are turning around.

Bullshit. All those loveley orange signs heralding the "American Reinvestment and Recovery Act" Projects seem to be posted over strangely silent activities.

In fact, the economy *LOST* an additional 247,000 jobs. So why has the Unemployment rate has dropped?

Two reasons:


1) The Unemployment rate is the percent of Americans who are out of work AND ACTIVELY SEEKING work. After 18 months of recession, many Americans have given up for the time being. They have adjusted to life at home, or life off the books, or a single-income in a formerly two-wage earner home. Accordingly, they are no longer considered in the work force, and no longer counted in the Unemployment figures. So, if there are 100 people in the 'labor force,' and 10 are out of work, that's a 10% Unemployment rate. If 5 of those people out of work give up looking, the Unemployment rate is calculated to be 5 unemployed out of 95 in the labor force, which is only a 5.2% rate. Voila! A lowered rate - even though the same number of people are out of work. Similarly, the homeless - which have grown under the foreclosure spate in the last 18 months - are *NOT* considered "Unemployed" because they are no longer considered in the Labor Force. When they lost their job, they were unemployed. When they lost their home and began life in their cars or on the street, they were magically removed from the Unemployment figures.

2) In order to be counted as "Unemployed," an individual must have *no job at all.* That means that when a middle-aged, middle-level manager making $50,000/year loses his job, he is unemployed. 8 months later, when the bank is threatening foreclosure, and the credit card companies are hounding him with dinnertime phone calls, and the kids' tuition is due, and the electric company is threatening to turn off the lights, he takes *anything* he can get...so he takes a part-time job, 20 hours a week at $8.50/hour, cleaning fast food restaurants after they close at night.

Guess what? According to Unemployment calculations, he is no longer Unemployed! He has a Job, even if its part-time! Voila! The rate goes down.

In other words, the longer the recession, the worse things get, the more desperate people become...the better the rate will look.

And that is what is happening under Obama's "Recovery."