Feb 04 2012

Print this Post

The Economy – Perception and Reality

Share to Google Plus

Things Aren't Always as They Appear

Yesterday, the Bureau of Labor Statistics (BLS) released a surprisingly strong January jobs report.

According to BLS, 243,000 new jobs were created in the first month of the year, and the unemployment rate dropped from 8.5 percent to 8.3 percent; capping a remarkable 8/10ths of a percent reduction in unemployment since last August.

This is unqualified good news for Americans. Nearly a quarter of a million people are earning paychecks, and providing for themselves and their families.

But in the zero-sum game of politics, the BLS report is shaping up as bad news for Republicans.

With the coming GOP campaign structured as an indictment of President Obama’s handling of the economy, a jobs report like this undermines the central Republican argument – if it turns out that the jobs report isn’t a fluke.

But does the perception of an improving jobs picture and growing economy really fit with the facts?

Here are some questions that are worth asking.

The monthly unemployment rate does not include people who are working part-time because full time work is unavailable, nor “marginally attached” workers”  – those who would work but haven’t been looking for four or more weeks. If you add these people to the established unemployment rate, the new, combined rate is 15.4 percent. Is that a sign of an improving economy?

With regard to BLS methodology, how is it possible that the unemployment rate decreased while those identified as “not in the labor force” increased by 1.2 million? That’s right. In December 2011, BLS stated that there were 86.697 million people “not in the labor force.”  That increased by 1.2 million in January. Yet unemployment went down?

According to BLS data, the Civilian Non-Institutional Population increased by 7.5 million people between January 2009 and January 2012. Yet the Civilian Labor Force – as a subset grew by only 40,000 in the same period.

The number of people employed has actually fallen between January 2009 and January 2012 – from 140.4 million in ’09 to 139.9 million this past January.

So, if unemployment was already 8.5 percent in January 2009, what has happened to nearly 8 million people, unaccounted for between the civil population growth and those actually employed?

Where is that number reflected?

Most importantly, how do these additional facts change your perception fo the January unemployment report?

But forget about unemployment for a moment and lets look at the broader economy. Props in advance here to the Economic Collapse blog

Housing represents nearly 20 percent of US GDP. If  the economy is really improving, how is it possible that new home sales hit a new low in 2011?

If the economy is getting better, then why has the number of Americans on food stamps increased by 3 million since this time last year and by more than 14 million since Barack Obama entered the White House?

If the economy is getting better, then why has the number of children living in poverty in America risen for four years in a row? If the economy is getting better, then why is the percentage of Americans living in “extreme poverty” at an all-time high?

If the economy is getting better, then why do only 23 percent of American companies plan to hire more
employees in 2012?

If the economy is getting better, then why does median household income keep declining?  Overall, median household income in the United States has declined by a total of 6.8% since December 2007 once you account for inflation.

Here all the good news coming out of Detroit and the return of the Big Three? If the economy is getting better, then why is the average age of a vehicle in America now sitting at an all-time high?

If the economy is getting better, then why are 19 percent of all American men between the ages of 25 and 34
living with their parents?

It was 19th century British Prime Minister Benjamin Disraeli who coined the phrase that there are, “lies, damn lies and statistics.” In assessing President’s record and any credit he may deserve in the lead up to November, look carefully at what is being presented, and crucially, what is behind it.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>