The Obama administration is in full panic mode with just two months away from the mid-term elections and facing a record low approval rating, it is throwing the kitchen sink at the economy to make sure it doesn't enter November with a 10% unemployment rate.
Over the weekend, we saw a flurry of micro stimulus programs announced, which will have no measurable long-term impact, and in some cases result in growth declines in the future, yet likely result in a very short "sugar high" boost to the economy.
It's just more of the same from this President. In the past week, the Obama Administration has preemptively claimed victory on two fronts; a military pullout in Iraq, and the American economy (and conveniently right in time for Labor Day). Of course, he “exaggerated” the pullout in Iraq. There are still 50,000 troops on the ground, and the troops he did pull out are merely being replaced with private mercenary contractors like those from Blackwater. So, in Iraq, nothing has changed.
The administration’s proclamation that they have “stopped the bleeding” in terms of the economy is a similar misrepresentation of the facts. Its not that they have stopped the bleeding, America has almost bled out!
Counting U-6 measurements of those not considered by the Labor Department as unemployed because they are either off jobless benefits or are working part time, the jobless rate of the U.S. has hovered near 20% for over a year at least. During the Great Depression at its peak, unemployment reached 25%, but even this comparison is misleading. The population of the U.S. during the 1930’s was around 122 million, meaning far less working age adults than there are today in our population of 310 million people. In fact, the actual number, not percentage, of unemployed and underemployed today far exceeds that of the Great Depression. The number of desperate people, the critical mass of poor in a country, can have a far more insidious effect on its social environment than the abstract historical “percentage”, at least in my view.
Given the real state of unemployment, why has there been such euphoria over the economy in the past few days? Well, August private employment numbers from the Labor Department of 67,000 jobs created “beat Wall Street estimates”, that’s why. Set aside the fact that 121,000 temporary government jobs were cut equaling an actual net loss of 54,000 jobs. At least the privet sector is alive, right? Wrong. Here’s the rub…
Mainstream analyst estimates have become an incredibly pervasive delusion among investors and the public lately, a delusion that now has the financial sector dancing to whatever tune the government and the central banks wish to play.
Analysts forecast monthly unemployment reductions or increases based on….? Certainly weekly unemployment benefits filings are a part of the prediction process, and perhaps a few other statistics which are questionable themselves, but at bottom, these estimates are a blind guess involving very little concrete math. A guess completely subject to the whims of the analysts themselves. This “guess” is then for some reason treated as a legitimate reference point by the entire market for determining the health of the economy. It becomes a purely fabricated psychological indicator with no basis in reality. Want to pump up the stock market for a couple weeks? Why not guess lower job creation than is liable to occur. Or, if you are the Labor Department, tweak the numbers up a little above estimates and then “revise” them down in another month or two after everyone has forgotten. Bankers and economists projected 40,000 new private sector jobs created in August. Labor Department numbers were 27,000 above that. Result: stock market jubilee and a declaration that the recovery is in full swing.
No comments:
Post a Comment