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If you’re following the U.S. economy these days, and who isn’t, you probably heard last week that unemployment dropped to 8.1%. Many news organizations were touting this number as a great achievement and noting it is the lowest unemployment rate in 3 years. Time to throw a ticker tape parade and break out the champagne or is it?
As noted by a few places in the media this drop was predicated not on people finding jobs but on people no longer considered to be looking for a job. 80% of the drop over the past year has been due to this factor alone. The reality is if these people had tried to stay in the work force over the last year unemployment would be closer to 9% right now. Not to be the bearer of bad news but this little tidbit of information is just the tip of a proverbial iceberg of bad economic data.
The labor participation rate today, the part of the population actually employed, is at its lowest since 1981 when America was still trying to throw off the Carter recession. In other words more and more people are relying on others to support them. Some are relying on government which is why we have record breaking numbers of people receiving food stamps. Still, many others are living with parents, siblings and children to get by. As if all of this was not depressing enough there is the combined under/unemployment rate. This rate includes those people that, although they have gotten jobs, do not have the kind of jobs they need. This rate includes the engineer that is working as a cabby or the accountant who is flipping burgers; all the people that have taken whatever jobs just to get by. When these people are included in the tallies what you get is shown in the chart below. The combined rate has lingered between 19 and 20% for three years, dropping only temporarily to 17.2% for the 2010 holiday season. Today it is rising at a rate that seems to suggest it will again break 20%. What this says is most of the jobs that are being found are low paying service jobs!
Unfortunately there is another statistic that says things are not going so great. Today those that loose their jobs are more likely to stay unemployed for a very long time then anytime in the recent past. In fact to get so many people staying unemployed for such long periods of time you have to go back to the Great Depression. Many of the numbers facing the American economy were actually worse under the Jimmy Carter recession but this number is not. It underscores the weakness of this economy and the reluctance of businesses to expand.
The fact is that this is the worst “recovery” since the great depression. This is likely due to the fact this administration has employed the worst tactics since the great depression. Economic growth has never been a top priority of this administration. First there was the 800 billion for shovel ready jobs that weren’t shovel ready. Money that added greatly to the deficit but created at best a few short term jobs and at worst amounted to little more then political payoffs. Then there is of course the passage of Obamacare. President Obama spent months on this piece of legislation while the country languished. Legislation that actually slowed down the recovery substantially. This was all followed by the President’s green agenda. An agenda that seemed to declare war on the economy. Oil, coal and even mom and pops saw regulations expand at an unprecedented pace. The fact is, American businesses large and small see this administration as an obstacle to growth not a help.
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Furthermore, as the media and the Obama administration parades around every new jobs report and mentions how much the unemployment figures are improving another disturbing trend has emerged. Unemployment figures that are announced to the media have been consistently undercounted and then quietly corrected later after the fanfare has died down. This practice is making improvements seem larger then they actually are or even showing improvement in unemployment when there really isn’t any. Revising figures up or down after the data has been further analyzed is common practice but the Obama administration stands out because its revisions are so consistently one sided. Nearly every single report is undercounting the number of unemployed, so much so that economic analyst are now assuming as much when they get the first numbers. It seems that the administration is releasing false economic data for public consumption only to correct it for the record after the fact. This is just one of the reasons some have suggested the President is intentionally cooking the books!
The truth is the U.S. economy is in terrible shape and the President seems too inept or too ideologically driven to deal with it. His policies often seem to only make the situation worse. The system wants to recover; businesses want to return to profitability and Americans want to return to work. The problem is something is holding an invisible lid on economic growth. Probably the biggest thing holding the economy down is uncertainty. Planning is everything and uncertainty makes that impossible. The President and his administration have made uncertainty the businessman’s constant companion by its constant flow of new regulations, tax policy, health reform and the government’s impact on financial markets.
Amazingly enough the President’s inability to handle the economy has not effected his approval ratings. Even though many of his actions have made the situation worse many people seemed to be willing to accept the administration’s line that things are improving and improving because of them. Something Rick Santelli called ostrich economics.
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