The Numbers Are Good, But They Need To Be Better

The American economy is slowly improving. It is not racing along, but it is improving. Investor’s Business Daily recently posted an editorial explaining that although we have a 4.1 percent unemployment rate, we are not yet at full employment. As the article explains, there are other numbers that need to be considered when looking at the economy.

The editorial reports:

But look at the numbers more closely and you see that we are far from full employment.

First, the 0.1 percentage point decline in the unemployment rate in October was almost entirely the result of the fact that 968,000 dropped out of the labor force that month.

That’s right, for every new job created, nearly four people left the labor force.

The broader measure of unemployed — which combines those actively searching for a job with those working part time but want to work full time or are “marginally attached” to the labor force — show the jobless rate to be 7.9%.

And the IBD-TIPP poll shows that there’s likely even more slack than that. The October survey — which asks those polled whether they or anyone in their household is looking for work — shows that the share of job seekers is currently above 10%. This number, by the way, has consistently tracked higher than either of the BLS’s two measures.

Here’s another way to look at it. Back in December 2000, the unemployment rate was 3.9%. But that month, the labor force participation rate — the share of the population that’s either working or looking for a job — was 67%.

The current rate: 62.7%.

If the labor force participation rate were the same today as it was in 2000, the official unemployment rate would be more like 10%.

The 10% unemployment rate would be better than what the actual rate has been in recent years, but obviously, it is not good.

The editorial concludes:

There is clearly still a need for pro-growth policies to get millions of workers sitting on the sidelines back to work.

Those pro-growth policies need to begin with the passage of President Trump’s tax proposal followed by a complete repeal of ObamaCare. If the Republicans in Congress want to be re-elected, they need to do both. It is time to put away the fear of a political outsider succeeding as President and begin to work together to move the country forward.

An article on

An article on the website of the JFK Library includes the following paragraph:

The president finally decided that only a bold domestic program, including tax cuts, would restore his political momentum. Declaring that the absence of recession is not tantamount to economic growth, the president proposed in 1963 to cut income taxes from a range of 20-91% to 14-65% He also proposed a cut in the corporate tax rate from 52% to 47%. Ironically, economic growth expanded in 1963, and Republicans and conservative Democrats in Congress insisted that reducing taxes without corresponding spending cuts was unacceptable. Kennedy disagreed, arguing that “a rising tide lifts all boats” and that strong economic growth would not continue without lower taxes.

I wonder if John Kennedy would be welcome in today’s Democratic party.

 

The Obama Administration’s Economic Policies Are Not Working

Zero Hedge posted a story today on the latest jobs numbers.

The article included the following charts:

http://www.rightwinggranny.com/wp-content/uploads/2015/05/not-in-labor-force.jpg

The article reports:

In what was an “unambiguously” unpleasant April jobs payrolls report, with a March revision dragging that month’s job gain to the lowest level since June of 2012, the fact that the number of Americans not in the labor force rose once again, this time to 93,194K from 93,175K, with the result being a participation rate of 69.45 or just above the lowest percentage since 1977, will merely catalyze even more upside to the so called “market” which continues to reflect nothing but central bank liquidity, and thus – the accelerating deterioration of the broader economy.

Our economy is not doing well. It is time for a change of policy.

The Real Unemployment Story Under President Obama

This is a chart of the labor participation rate since 2004:

The chart is from an article posted Friday at Doug Ross @ Journal. As you can see from the chart, the rate was a pretty solid 66 percent for the years 2004 through 2008. It began to drop in 2009 and has continued downward. The current low unemployment rate was obtained by not counting the people who have dropped out of the labor force.  As you can see, there have been a lot of them since 2009. The bottom line here is simple–the economy is not recovering at this time. It is limping along and will be further limited by the President’s war on coal and other environmental decisions.

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The Numbers Behind The Numbers

The two charts below are from a website called zerohedge.com. They were posted today. The article posted the charts to explain how the unemployment rate has gone from 7.0% to 6.7%. The unemployment situation for Americans have not improved–more Americans have given up and stopped looking for jobs. We are not in an economic recovery.

LaborForceParticipationRate

 

 

 

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About Those Jobs Numbers

John Crudele at the New York Post has posted a few articles raising questions about how the Obama Administration is calculating unemployment numbers. He posted one yesterday. Mr. Crudele has pointed out that unemployment numbers are coming from the Census Bureau and that in 2010 one of its enumerators was caught fabricating interviews.

The article reports:

The Census Department surveys that went into the November jobless rate actually took place during the week that included Nov. 5 instead of the normal Nov. 12 week.

The Labor Department did put in a note about the survey week change in its November report.

But it should also have included another line that said: “The data for the unemployment rate may have been compromised. Lots of people are looking into the matter right now. We’ll get back to you on whether you should believe these numbers or not.”

John Hinderaker posted a story about the jobs numbers at Power Line today.

The article at Power Line includes the following chart:

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The chart shows what has happened to the labor participation rate since 2008–it dropped like a rock and stayed there.

The article at Power Line quotes James Pethokoukis of the American Enterprise Institute:

    1. There are still 1.1 million fewer employed Americans today than right before the recession started, despite a potential labor force that’s 14 million larger. And there are 3.6 million fewer full-time workers than back in 2007.

    2. The employment rate, the share of Americans with a job, is 58.6% — exactly where it was in November 2009.

    3. If the labor force participation rate were where it was a year ago, the jobless rate would be 7.9%, not 7% (and 11.3% if the LFPR were at prerecession levels, though closer to 9% if demographics-adjusted).

The article at Power Line concludes:

Back in the heady days of 2008 and 2009, the Democrats were universally confident that the economy would improve dramatically, as it always does after a recession, regardless of the policies the Democrats followed. All they would need to do was take credit when the time came. The bitter lesson of the last five years is that federal policies do matter. The American economy is diverse and resilient, but if our government’s policies are stupid enough, they can blight the prospects of an entire generation.

If you were planning to break out the champagne because of the 7 per cent unemployment rate, you might want to hold off for a little bit. If you want to turn this around, think before you vote.

 

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There Were Some Things Left Out In The Unemployment Numbers

Yesterday Breitbart posted some of the facts the media seems to have missed in reporting on the jobless numbers this week. The article quotes James Pethokoukis at the American Enterprise Institute (AEI):

The labor force participation rate fell again as potential workers stopped looking for work.  … [I]f the LFP rate was where it was in January 2009, the unemployment rate would be 10.8%. …

The share of the unemployed out of work for 27 weeks or longer increased to 40.2% from 38.1% in January.

The employment-population ratio is exactly where it was a year ago, at an almost rock-bottom 58.6%.

This really doesn’t look like much of an economic recovery to me.

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Between The Lines On The Jobs Numbers

Breitbart.com posted an article today about the latest jobs report. The article points out that the dip in the unemployment rate was the result of over a half-million people dropping out of the workforce.

The article also points out:

Over the last five months, 73% of all jobs created were government jobs. Moreover, the unemployment rate for government workers plunged to 3.8% in November — which is considered full employment.

Logically, when the civilian workforce is smaller, fewer people are paying taxes, and the money to fund the government shrinks.

The article reminds us:

Even though deficits rule the day at every level of government, according to the Bureau of Labor Statistics, of the 847,000 new jobs created since June, a full 621,000 were government jobs. In November alone, 35,000 new government jobs were created.

In other words, as the labor participation rate plummets to a thirty year low — which means we have fewer taxpayers — we’re not only increasing the number of taxpayer-funded jobs, but the government is using the creation of these jobs to juice the employment numbers in a way that makes it look as though the job situation is actually improving.

I would be very surprised to see any of these numbers reported in the mainstream media.

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The Unemployment Numbers

The truth behind the unemployment numbers from the Bureau of Labor Statistics:

Labor Force Statistics from the Current Population Survey

 

The bottom line here is simple. The only reason the unemployment number is below 9 percent is that the number of people in the labor force is less than it has been. There are two ways to lower the unemployment rate–employ more people or remove people from the labor force so that the percentage of unemployed people is lower. As you can see, the number of people in the labor force is decreasing–not increasing. We are moving in the wrong direction.
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