Jan 08 2012
I always marvel at people who think PR is more powerful than reality. The bureaucrats in DC are a prime example of this weird belief system. They put out dodgy unemployment numbers and expect everyone suffering from a poor job market to suddenly think everything is OK! It’s clearly magic wand time in DC again.
Sort of like those global warmists, who fail to recognize there has been no significant warming over the last 2-3 decades. Their statistically manipulated, cherry-picked and ‘hidden’ data claims all the diversity of weather we see around us is due to warming they only see in their unmaintained computer models. Yet a review of raw measurements shows nothing of the kind. Fantasy over fact.
When the liberal news media hailed the December unemployment rate of 8.5%, like good little journalist majors (who are mathematically stunted to middle school level math) they missed the critical details behind the number. They once again fell down on the job. But this kind of analysis is not taught in schools anymore. To think is a lost art. Today we regurgitate information.
I have been doing this analysis for months now, showing how the work force size used to compute unemployment is the real number shrinking. Not the number of people out of work or not working in their career field (i.e., working part time or lower wage jobs to get by). We may be adding jobs, but we are losing people in the work force. Fewer workers means slower growth, less consumer demand, less revenues. It is a vicious downward spiral. Ignoring it will be catastrophic. Coming back out of it will take years.
Since 2000 we have the numbers for the labor force, and unlike the general population which has been growing over the last decade, the number of people “COUNTED” as the workforce has leveled off. See the blue area in the chart below (click to enlarge):
The only reason the labor force took a dive in 2008 (not surprisingly, the year the Democrats took over in DC) was due to the Great Recession caused by the housing market debacle (in turn caused by liberal shenanigans with respect to lending rules). Our population has not declined, just those the government decides to count as the pool of workers. This is where the fiction begins.
If the historic trend of workforce size to population size had remained in place (the red line), we would see almost 18,000,000 more people employed. A far cry from the supposed 200,000 added to the employment roles in December.
Worse yet, there was no typical increase in the seasonal job numbers as one would expect. From October to November the workforce SHRUNK by 315,000 workers! From November to December the workforce added back a paltry 4,000. The January numbers are going to look brutal when the seasonal jobs are lost.
So why would the government compute unemployment rates without taking into account the normal workforce size as a percentage of the population (a number that is very stable during periods of low unemployment – and therefore well known for our economy)?
As Obama and the Dems learned, the government bureaucracy is lethargic and pathetically slow to act. If you think ‘shovel ready jobs’ are a myth, wait until you try to change a buggered statistic in the government. Even though it is horribly inaccurate, it can take decades to fix!
Which is why strong economies are based on the free-wheeling, innovative and nimble free economy – not large and ponderous bureaucracies. Even this simple fix would be made at lightening speed outside government.
If we wanted to measure reality – the reality being felt on the streets of Middle America – we would adjust the workforce to reflect where really is. The number of people available to work is 158,5 million, not the 141 million the Department of Labor is using. When we compute the fraction of people on the unemployment roles out of this larger, more accurate pool, the actual unemployment rate is 11.2%.
So, do the people in DC and in front of the TV cameras (completely insulated from the economic downturn) think this fig leaf is going to make everyone love this administration and ignore the damage done by its incompetence and liberal policies? I don’t think so. These are the same people who missed the 2010 backlash election wave coming.
Denial is not something that is contagious folks. Outside those pretending reality does not exist, is a the 99% of us living the reality. And who will be voting the reality come November.