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Unemployment Falling, Good Times Ahead?

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Last Friday (February 3, 2012), the MSM treated us to the latest Bureau of Labor Statistics (BLS) unemployment rate, the “official” U-3 rate of 8.3%. That rate, while not the best in the world, is getting better. But does the U-3 rate fall mean that the economy is improving? Does anyone, besides Kool-Aid drinkers, believe an unemployment rate of 8.3% mean that the economy is really improving? Well, this article presents facts and opinions of economists so that you can decide.

 /><br /> Let's begin with Dr. <a href=Paul Krugman, who called in September, 2011, for more spending. His observation is that while the latest unemployment report is favorable, it should not be a clarion call for ceasing efforts. He said, “…for once falling unemployment was the real thing, reflecting growing availability of jobs rather than workers dropping out of the labor force….” Really? I ask you to keep reading.

Let’s now turn our attention to CNN’s Candy Crowley. On Sunday’s (February 5, 2012) State of the Union program, she had on to discuss the economy in general and unemployment in particular:

  • Alice Rivlin, director of the Office of Management and Budget in the Clinton administration. About Friday’s report, she said: “The unemployment figures and the new jobs in the Friday report were good news.”
  • Douglas Holtz-Eakins,chief economist for President George W. Bush’s Council of Economic Advisers. He said: “…it has to assume an enormous tax increase [letting Bush-era tax cuts expire] next year, and that means it has to assume that we have bad economic growth. And that gets you high unemployment.”
  • Ron Brownstein, senior political analyst at CNN. He said: “…and I think almost all political strategists agree that kind of direction matters more than level.”

During the two segments, eight minutes, that Crowley devoted to these subjects, not once were the subjects of the decline of work-force participation rate or the record 1.2 million people one month increase in the number of people not in the labor force, discussed.

Now let’s turn our attention to what Candy Crowley left out, to Zero Hedge. Here are some inconvenient truths (to quote AlGore) that Krugman, CNN, and the rest of the MSM forgot to include:

  • 1.2 Million People Drop Out Of Labor Force In One Month – a record
  • Labor Force Participation Rate Falls To 30 Year Low

I encourage you to examine the graphs that Zero Hedge has compiled.

Finally, let’s examine the tables of employment numbers from the BLS itself. First, this observation: for both the duration of unemployment (table A-12) and rate of unemployment (table A-15), the “seasonally adjusted” numbers, rather than the “not seasonally adjusted” numbers, were published. I’ll wager that few, if any, in the MSM can explain the difference. I can.

Second, from December, 2011, until January, 2012, table A-12 shows, for all categories, the number of unemployed people increased. Similarly, table A-15 illustrates an increase in the unemployment rates for all categories, particularly the U-3 and U-6 rates. Further, the U-6 rate, some say a better indication of unemployment, increased from 15.2% to 16.2%. These are “not seasonally adjusted” figures.

Gosh, how did Krugman and Crowley and the MSM and this administration miss these figures?

So, to quote Dr. Krugman, “Things Are Not O.K.” One month does not a trend make. Tax increases equate to higher unemployment. The MSM, who cannot consult economists, continue to report only what they (IMHO) want to report. As Henry Morganthau, Secretary of the Treasury under FDR, said: “We have tried spending money. We are spending more than we have ever spent before and it does not work. …we have just as much unemployment as when we started. … And an enormous debt to boot.” In order to reduce the deficit, he also said: “We have never begun to tax the people in this country the way they should be….. I don’t pay what I should. People in my class don’t. People who have it should pay.” Isn’t it interesting that he used the word “class?” But that is a subject for another post.

The U-3 unemployment rate would be 11.0% if the size of the labor force as a share of the total population was the same as it was when in January, 2009, when Barack Obama took office. The labor force share in 2009 was 65.7% Now it is 63.7%. The unemployment rate is falling because economic growth is so slow that nearly 4 million Americans have quit looking for work and the Labor Department has ceased to count them.

Please don’t get me wrong. I am in favor of full employment, for everyone who wants a job to have one. What I am against is how the current administration, as well as Dr. Krugman, cannot/will not learn from history, how this administration will mortgage my grandchildren’s futures, and how ideology trumps reality. And how the MSM goes right along with this administration.

But that’s just my opinion.

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  • Glenn Contrarian

    Um, Warren –

    Has it ever occurred to you that America is STILL in the thrall of Reaganomics, of “trickle-down” economics? You know, the economic theory that George H.W. Bush called “voodoo economics”?

    You want to gripe about low taxes, right? So, how low do taxes have to go before the economy magically turns around? FYI, Warren, our tax burden under this MarxistSocialistNaziMuslim (and black) president you hate so much are LOWER than they were under Bush 43, Bush 41, Reagan, Nixon, AND Eisenhower! The LAST time our tax burden was this low was during the TRUMAN administration! And the LAST time that our tax burden was this low under a Republican president was under HOOVER!

    But if we listen to you, well, Obama’s taxing America to death!

    And THEN you might try pointing out our horrid 35% corporate tax rate, the highest in the modern industrialized world. BUT one thing you will NEVER hear a conservative admit is that the 35% corporate tax rate is the NOMINAL tax rate…but after all the deductions and tax breaks, our corporate tax rate is the second-LOWEST in the modern industrial world!

    So our tax burden is at its LOWEST point in the past sixty years, and our corporate tax rate is the second-LOWEST in the modern industrialized world…so, um, Warren – why the heck ain’t our economy booming? Could it be that – gasp! – George H. W. Bush was RIGHT that trickle-down economics doesn’t work? Or was he just another ‘mindless’ Keynesian? Hm?

  • Jordan Richardson

    Warren, your articles would really benefit if you relinquished this whole “I dare you to read more” bullshit.

  • Re: comments #1 and #2, Glenn and Jordan, perhaps y’all will find this article interesting if y’all have the intelligence and attention spans to understand it.

  • Warren, where did you learn that insulting people’s intelligence was a fantastic way to persuade them of your point of view?

  • As far as the argument goes, I’m curious as to where Zero Hedge got their numbers. How exactly do you determine whether or not someone is an active job seeker?

    I’m wondering whether or not it has anything to do with Congress deciding it wasn’t going to sign off on any more unemployment benefit extensions.

    Here in California (I’m assuming it’s the same in most other states), you have to record and report your job search efforts as a condition of receiving benefits.

    I don’t know about you, but if my benefits get cut off I’m not going to feel all that inclined to keep reporting my job searches to the unemployment office. After all, what’s in it for me?

    Could that perhaps account for at least some of the jump in the numbers of people who’ve “given up” looking for work?

  • zee

    Warren, first off, you have the numbers wrong (as do your friends at Zero Hedge).

    75k entered the labor force in December. The 1.2M leaving was applied in a revision to all of 2011. It’s a common mistake to make, and virtually all conservative commentators made that mistake. Regardless, that wasn’t a one month change. It was the annual Census revision. If you take out the revision, the number was +75k for December, since the revision was technically -1.275M for the first 11 months of 2011.

  • Jordan Richardson

    Warren, I gave you a writing tip not a critique on the content of your “article.” I have no idea why your rebuttal involves directing me to some other article completely unrelated to what I said.

  • Igor

    Warren, the successful bailout of GM by Obama can only lead one to conclude that GOVERNMENT management of GM has outperformed Private management.

    That successfully refutes the idea that private enterprise always out performs the government.

  • devil’s advocate troll

    …yup – the government saved GM and the rest of us from having to innovate and reinvent transportation

    so here we go on a revd up period of environmental degradation

  • troll, you know that as a megacorporation General Motors is in a prime position to lead in the development of new modes of transportation, right?

    Oil multinationals are already some of the heaviest investors in what, for now, is still called “alternative” energy. And even in the auto industry, we see more and more new low-emission, high-mileage, hybrid and fully electric models coming out every year.

    That’s the self-perpetuating nature of large organizations. They don’t just disappear when the conditions under which they formed no longer exist: they retool and adapt.

  • Igor

    It’s a cinch that the OLD GM under private management would never have countenanced alternative energy, but the NEW GM under government management may very well do that both for forward initiative and to save the corp and make sure it’s among the winners.