I said last week that the latest unemployment figures were a chimera. More and more evidence is emerging to support that conclusion.
1. Jack Welch points out some of the issues in a Wall Street Journal article. Here's a brief excerpt.
Bottom line: To suggest that the input to the BLS data-collection system is precise and bias-free is — well, let's just say, overstated.
Even if the BLS had a perfect process, the context surrounding the 7.8% figure still bears serious skepticism. Consider the following:
In August, the labor-force participation rate in the U.S. dropped to 63.5%, the lowest since September 1981. By definition, fewer people in the workforce leads to better unemployment numbers. That's why the unemployment rate dropped to 8.1% in August from 8.3% in July.
Meanwhile, we're told in the BLS report that in the months of August and September, federal, state and local governments added 602,000 workers to their payrolls, the largest two-month increase in more than 20 years. And the BLS tells us that, overall, 873,000 workers were added in September, the largest one-month increase since 1983, during the booming Reagan recovery.
These three statistics — the labor-force participation rate, the growth in government workers, and overall job growth, all multidecade records achieved over the past two months — have to raise some eyebrows. There were no economists, liberal or conservative, predicting that unemployment in September would drop below 8%.
I know I'm not the only person hearing these numbers and saying, "Really? If all that's true, why are so many people I know still having such a hard time finding work? Why do I keep hearing about local, state and federal cutbacks?"
. . .
The reality is the economy is experiencing a weak recovery. Everything points to that, particularly the overall employment level, which is 143 million people today, compared with 146 million people in 2007.
There's more at the link.
2. Lance Roberts, writing at Street Talk Live, has two very interesting and informative articles on the subject:
Here's his conclusion from the first article:
... there is currently no clear way to measure the millions of individuals who have disappeared into the abyss of the uncounted. Many of the 88 million individuals that are currently unemployed, and not counted by the BLS, would likely be more than happy to work given the opportunity. However, in the current economic environment, those options are not widely available which is why there is very much a silent "depression" running through the underbelly of this economy. In this depression we don't see the breadlines and soup kitchens simply because they arrive electronically and in the mail.
There's more at the link. Bold print is my emphasis.
I couldn't agree more! I'm one of those who would love to find a job: but when one's partly disabled and unable to work more than part-time, in today's economy it doesn't matter that one has four university qualifications and loads of experience - other, healthier people who can work a full day are going to get what few jobs there are.
3. John Mauldin devotes an entire issue of his 'Thoughts From The Frontline' newsletter to the latest unemployment report. He titles it 'The Unemployment Surprise' (link is to an Adobe Acrobat document in .PDF format). He makes many good points, and I urge you to read his report in full. Here's just one paragraph from it to whet your appetite:
For the last three years, while we were averaging between 120,000-160,000 new jobs a month that paid between $20,000-40,000, we were losing anywhere from 20,000-60,000 jobs a month that paid more than $70,000. A detailed study of job status earlier this year by the Center for Labor Market Studies at Northeastern University found that more than 53% of college graduates under 25 were underemployed last year – working in jobs unequal to their college or postgraduate attainment.
There's much more at the link.
I highly recommend reading all the linked articles and reports in full. Together they'll give you a much more informed perspective on why, when it comes to the truth about unemployment, politicians (from both sides of the aisle) have for years treated us like mushrooms. The Obama administration is doing so again, this time rather more blatantly and opportunistically than usual.
Peter
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