Time to talk about unemployment again.
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Where’s that tube of lipstick? Where’d the darn pig go?
Well, the folks slaving away at the Bureau of Labor Statistics came out into the sunlight today for their monthly spa treatment and dropped the March unemployment stats. There was an F5 tornado in the West Wing about the same time. By way of a reminder, they’ve reported job growth of about 250,000 new jobs in both January and February to the sound of marching bands and fireworks from the administration heralding the resurrection of the economy and I know it’s a really bad Good Friday pun. It may have been Good Friday in Christendom, but there was nothing good about the President’s Friday with this report.
Economists were expecting job creation this month in the 200,000 plus range, the CNBC analyst actually projected 300,000) and were [drum roll please] shocked! to read that only 120,000 jobs had been created. We are now weathering a combination of spin, finger pointing and backpedaling from administration officials, economists and the major media who’ve been trumpeting the “recovery” for the last couple of months. Obviously, they don’t have the benefit of reading Liberty News because our regular readers know better.
The drop in new jobs was only half the bad news. Unemployment – as in the seasonally adjusted “U3 Unemployment Rate” dropped a tenth of a point from 8.3% to 8.2%. That’s normally cause for brass bands and a new round Presidential fund raising, but about everybody is catching on to what we’ve been shouting from the roof tops for what seems like forever, the reason the unemployment rate is falling is NOT because the economy is recovering, it’s because people are leaving the workforce because they can’t find a job. Repeat: they can’t find a job.
I like charts. They’re worth at least ten thousand words. Here’s two, and when your Obama loving friends and family blabber on about “the recovery”, slap these down on the table.
The first shows the change in employment coming out of recessions, please note the red line, it’s the “Obama recovery”.
Next up is the track of the number of people who are not in the US labor force. That red line going up like a skyrocket is the reason that unemployment is “down”.
And for the President, there’s potentially even worse news. Economists are beginning to think that maybe the “U3” rate isn’t really representative of the real unemployment picture in the US, and they’re starting to look at the “U6” rate that includes those pesky long term unemployed people who’d like to have a job but who’ve stopped looking. That will be a real oopsie if President Obama, his Treasury Secretary and his Press Conference Mouth Piece have to work on explaining that one.
Forget the official 8.2% unemployment rate. Take a hard look instead at what’s known as the U6 rate, which tracks not only those out of work but those who’ve essentially given up looking for work.
That rate stands at about 14.6%, or nearly double the official unemployment rate.
As economists digest the disappointing job numbers released Friday — just 120,000 jobs added in March, well below expectations — some say the U6 figure is the data point people should be focused on.
The official figure used by the Labor Department “leaves out a lot of people who’ve just given up,” said Aparna Mathur, a resident scholar and economist at the American Enterprise Institute.
Welcome to the chorus folks.
While attention to the details – and the fundamentals – will almost certainly cause the President some political problems, the real problem is that, contrary to what the administration and the Fed are bleating, the economy is NOT recovering and we are NOT positioned to see a recovery anytime soon. Take another peek at the charts.
The stock market has had a good run in the first quarter and as of today, the headlines are talking about how the market has “flattened” because of the jobs report and because of earnings reports that will start coming out that are going to be well below expectations. In Europe, the problem de jour isn’t Greece, it’s Spain, and Spain – and soon Italy – aren’t problems that can be solved easily. Their problems dwarf Greece and with the EuroZone already experiencing a “mild” recession Spain – or even another trip to the well by Greece – could portend disaster. Add to the externals, you’ve got the Obama administration doing everything possible to heap more job killing regulations on the nation’s businesses every day, their efforts to destroy the coal industry and put coal fired electricity generation out of business, their denial of oil and gas exploration permits on public and offshore sites known to harbor oil and gas, and the ever increasing cost of gas in their quest to get you to buy a Chevy Volt.
Not good. And it’s reflected in the dynamics of the U3 vs. U6 unemployment rates…
One of the biggest obstacles to an economic recovery has been solving the problem of the long-term unemployed. According to a recent report from RBC Global Asset Management, the ranks of the long-term unemployed, or those out of work for 27 weeks or more, have soared to 7 million, up from 1 million in 2007 ahead of the onset of the financial crisis.
Mathur said about 43% of the 12.8 million Americans officially labeled out of work fall into the category of the long-term unemployed, “which is huge, we’ve never seen those kinds of numbers in any recession,” she said.
That problem is reflected in the U6 rate.
Mathur said the gap between the official rate and the U6 rate is usually about two percentage points. But in the wake of the financial crisis that followed the collapse of the U.S. housing market in 2007, the gap has widened to about seven points.
The problem is also exacerbated by the fact that employers are very reluctant to hire people who have been unemployed for an extended period of time. Nothing the Obama administration has done, or even talked about, addresses this problem of the long term unemployed. We’ve never faced this problem before, see the above chart.
Here’s a couple of snippets that reinforce the idea that our economic problems are systemic and are being ignored by the administration, and while the sources don’t say so, the problem is that we’ve expanded the role of government to the point where it is choking the inherent creativity of Americans as we are becoming an entitlement nation.
Today’s data also showed that Americans worked fewer hours and earned less on average per week, boding ill for the consumer spending that makes up 70 percent of the world’s largest economy.
“We see a lack of sustainability in terms of strong job growth,” Tony Crescenzi, a strategist at Pacific Investment Management Co. in Newport Beach, California…
And from the Christian Science Monitor,
…the economy – especially retailers – may be hitting some head winds as a result of gasoline prices that are approaching $4 a gallon.
Hint, the gas station across from my office is now over $4.00. We’re headed for $5.00, the price of gasoline typically goes up all summer, peaking around Labor Day. And then the price trails off while home heating oil skyrockets. Thanks Barack. Hopeless and Unexpected Change.