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Friday, February 4, 2011

When a lower unemployment rate is bad

Two days ago, Feb 2nd was Groundhog Day, and I tend to think of the kinda funny movie starring Bill Murray where he plays a weatherman sent to Puxatony, PA to cover the annual event, and in the process, he keeps repeating that specific day over and over.  And though he tries varying the day to make it somewhat different, ultimately Murray's character wakes up and nothing changed.

This is how the media cover economics, and in particular unemployment.

Every month unemployment figures are released and anything that is 'positive' is trumpeted loudly as 'Recovery!!!' and anything negative is swept under the rug.

So let's take a quick look at the figures and see this dynamic at play.

AP said that "The unemployment rate is suddenly sinking at the fastest pace in a half-century, falling to 9 percent from 9.8 percent in just two months"

Yet only 36,000 new jobs were created.. Hmmmm

So how does the Labor Dept. come up with its figures?

"The government uses a separate survey of households to calculate the unemployment rate. It calls 60,000 households and asks people if they're working or looking for a job. This survey includes some people not counted in the payroll survey: the self-employed, farm workers and domestic help. It also includes those who work at small companies. By contrast, in the payroll survey, about 140,000 businesses and government agencies send forms to the Labor Department showing how many people are on the payroll and how many hours they worked."  (AP)

Now this is Interesting-  The Labor Dept basically does what the Nielsen ratings do with television.. take an extremely small sampling and make determinations as to the nation as a whole.  According to US Census, there are over 112 Million US households..  yet they sample 60,000.

Mathematically that adds up to five- ten thousandths of 1 percent. (0.0005%)

There are over 23.8 Million businesses and companies in the US.  The Labor Dept surveys 140,000 of them.   That's a little more than half of 1 percent or 0.053% surveyed

So based on the information of 0.0005% of households and 0.053% of US businesses it supposedly paints the unemployment picture of the nation as a whole.

At the bottom of the AP article, is where the truth is buried, "The rate is falling now in part because some people without jobs have stopped looking. The number who have given up looking rose to 2.8 million last month, from 2.6 million in December. About 1 million of those workers said they were discouraged... There are still nearly 14 million people unemployed in the United States. That's about twice as in December 2007, when the recession began."

An additional 200,000 people have given up finding employment in One month... Seven million More people unemployed than 3 years ago at this time... At 64.2%, the labor force participation rate (as a percentage of the total civilian noninstitutional population) is now at a fresh 26 year low, the lowest since March 1984, and is the only reason why the unemployment rate dropped to 9%.

That doesn't sound too optimistic.

The truth at bottom of article continues.. "The government also said fewer jobs were created last year than first thought -- a net 909,000, down from an estimated 1.1 million. The economy lost about 8 million jobs total in the two years before that.  In the past three months, the economy generated an average of 83,000 net jobs per month, according to the survey of business payrolls. It takes 125,000 jobs a month to keep up with population growth."

In other words, the economy is creating only 66% of the necessary jobs to match population growth

And 15.7% of blacks out of work (1 in 6) and the teenager rate is 25.7%...

Gallop did a poll.. their data found official unemployment to be at 9.9% and underemployment adjusted to 19.2%

All the media on all the networks were focused solely on the "9.0%" and on CNBC, Rick Santelli had the courage to criticize his collegues on their number-spinning to their faces;

"We have overwhelming evidence the jobs market is disappointing, and all of you are trying to look for that one half of spaghetti in a 50 lb. spaghetti bowl. This is not great data," Santelli claimed. "We know that the U6 probably gives you a better indication of the true unemployment rate …"

When you get beyond all the statistical games and media spin, the sincere truth is that the government is Not concerned with employment.   The Fed is focused on creating a new asset bubble via Wall Street to surpass the housing bubble that recently exploded.  The Treasury is focused on ongoing currency wars to see how fast we can devalue our dollar.  Our President, when he's not writing public love letters to Reagan, is finding new ways to muck up our standing in Egypt & the Middle East. And Congress is singularly focused on repealing Health Care and threating to not vote to increase the debt ceiling unless social cuts are made.

NO ONE in Govt is focused on job creation.  And if you ever have asked yourself, why aren't things getting better?  Well, now you know...

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