“Were we directed from Washington when to sow, and when to reap, we should soon want bread.” ~ Thomas Jefferson
Each day we see proofs of the wisdom of the Founding Fathers in the creation of a federalist form of government which gave superior authority to a central government within a very limited sphere, and left all other functions to the states, or the people. Far from being the limited government which our Founders envisioned, the federal government today is a monstrous leviathan which is equal parts incompetence and avarice. This is what happens when government attains more power. Government is the only entity legally able to use force to achieve its goals. Government is a monopoly, and therefore does not have to be efficient or innovative on order to retain its “customers.” It is essentially immune from the disastrous consequences of its decisions and actions. It can compel continued allegiance and higher payments.
A timely example of the results of government expansionism is in the continued stagnancy of our economy. In the last days of the Bush presidency, and expanded throughout the Obama presidency, the federal government took steps which would supposedly save the economy from a financial collapse (which itself was the result of government interference in the market). With the passage of the “stimulus” bill, unemployment was not supposed to reach 8% according to the Obama administration, yet it did that and more. Unemployment spiked above 10% AFTER the near-trillion dollar stimulus was passed, and stayed at or above 9% for almost three years, before dropping to above 8%, a point we were not supposed to have reached at all.
In politics and in business, a consistent message is usually seen as a sign of strength. With the slow trickle of a consistent message, your brand is defined almost imperceptibly by the consumer until your message and brand are linked subconsciously.
When is this a bad idea? When there is inconsistency between your actual product and the “message” you are consistently promoting. You might get away with it for a while, but in time it creates cognitive dissonance in the consumer - they just know something isn’t right.
Case in point — the Obama administration and the jobs reports. Have those monthly talking points become a little, uh, stale? Sounding familiar? Were you expecting hope and change? Below are excerpts from jobs reports from November 2009 to present:
June 2012: “Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.” (LINK: http://www.whitehouse.gov/blog/2012/07/06/employment-situation-june)
May 2012: “Therefore, it is important not to read too much into any one monthly report and it is helpful to consider each report in the context of other data that are becoming available.” (LINK: http://www.whitehouse.gov/blog/2012/06/01/employment-situation-may)
No doubt all of us would take some good economic news right now, but that won’t come from the jobs report for June, which was released this morning showing the unemployment rate rising slightly to 9.2% and adding only 18,000 jobs:
U.S. employment growth ground to a halt in June, with employers hiring the fewest number of workers in nine months, dampening hopes the economy was on the cusp of regaining momentum after stumbling in recent months.
Nonfarm payrolls rose only 18,000, the weakest reading since September, the Labor Department said on Friday, well below economists’ expectations for a 90,000 rise.
Many economists raised their forecasts on Thursday after a stronger-than-expected reading on U.S. private hiring from payrolls processor ADP, and they expected gains of anywhere between 125,000 and 175,000.
The unemployment rate climbed to 9.2 percent, the highest since December, from 9.1 percent in May.
Numbers from the two previous months were revised down by 44,000 jobs; April dropped from 232,000 to 217,000 and May from 54,000 to 25,000. In case you’re wondering, the economy needs to create around 120,000 jobs each just to keep up with population growth.
Another bad sign is the U-6 rate, what many economists call the “real unemployment rate,” jumped from 15.8% to 16.2%.
Just like government intervention in the economy in the 1930s prolonged the Great Depression, intervention and uncertainty with President Barack Obama’s economic policies are slowing the pace of recovery today.
While there were some signs recently that job creation was picking up steam, all of that seemed to be erased this morning when the Bureau of Labor Statistics released jobs numbers for March:
U.S. employers added just 88,000 jobs in March, the fewest in nine months and a sharp retreat after a period of strong hiring. The slowdown may signal that the economy is heading into a weak spring.
The Labor Department said Friday that the unemployment rate dipped to 7.6 percent, the lowest in four years, from 7.7 percent. But the rate fell only because more people stopped looking for work. People who are out of work are no longer counted as unemployed once they stop looking for a job.
The percentage of Americans working or looking for jobs fell to 63.3 percent in March, the lowest such figure in nearly 34 years.
The economy needs to add around 150,000 jobs per month just to keep up with population growth. Labor participation, which dropped by 496,000 last month, is now at a 30-year low. James Pethokoukis noted that the unemployment rate would be at 10.98% if labor participation was the same as January 2009.
The Bureau of Labor Statistics (BLS) reported this morning that the economy produced 80,000 jobs in June and the unemployment rate held steady at 8.2%. Forecasters expected anywhere from 90,000 to 100,000 jobs. BLS also revised numbers for April, reducing the number created by 9,000 from +77,000 to +68,000 jobs, and May, upward by 8,000 to +77,000 jobs. The U-6 rate, what some economists call the “real” measure of unemployment, actually edged up from 14.8% to 14.9%.
In order to keep up with population growth, the economy needs to produce 120,000 to 150,000 jobs per month.
AKA “The Only Scandal Conservatives Need”
- 69,000 jobs added (That’s far too weak for even a piddling recovery)
- +.1% unemployment, up to 8.2%
- 12.7 million Americans unemployed
- +.2% to civilian labor force participation, up to 63.8
- 8.1 million Americans employed just part-time for economic reasons
- 2.4 million Americans marginally attached to the labor force
- 830,000 discouraged workers
- March and April job increases revised downwards
- Sure path to Obama’s defeat in November
The May jobs report has just been released by the Bureau of Labor Statistics…and it’s awful. It’s one of the weakest reports all year, and has shown quite clearly that the “Hope N’ Change” policies of President Obama are not working. According to the BLS press release:
Nonfarm payroll employment changed little in May (+69,000), and the unemployment rate was essentially unchanged at 8.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in health care, transportation and warehousing, and wholesale trade but declined in construction. Employment was little changed in most other major industries.
Household Survey Data
Both the number of unemployed persons (12.7 million) and the unemployment rate (8.2 percent) changed little in May. (See table A-1.)
The jobs numbers for February were certainly good news. In case you missed it, the Bureau of Labor Statistics reported that, while the unemployment rate held steady at 8.3%, businesses created some 227,000 jobs last month.
Given that a Gallup survey released before the BLS numbers were made available showed unemployment at 9.1%, many are wondering why there is such a discrepancy. Over at the Washington Examiner, Tim Carney explains:
Both Gallup and the BLS use randomized surveys to produce estimates of the current state of the labor market. Gallup calls 30,000 people every month over the span of the entire month. BLS conducts 60,000 interviews a month (both face-to-face and over the phone), but conducts them all in one week. More importantly, however, the BLS uses a model to smooth their raw numbers out to account for seasonal swings in the labor market. Gallup does not.
[E]very January the U.S. economy sheds more than million a jobs as retailers let people go after the Christmas shopping season. There is another smaller drop off in the summer as kids leave their summer jobs and return to school.
The BLS does include a seasonally adjusted unemployment number in each report. For February it is 8.7 percent, which is still below Gallup’s 9.1 percent number. Why?
Every month reporters usually mention two numbers from the BLS: the number of jobs created/lost and the unemployment rate. Most people assume that the unemployment rate is a function of the jobs number. It’s not. The BLS creates both numbers from completely different surveys.
On Friday, President Barack Obama gave a speech to address the latest monthly jobs report. If the consequences of his policies were not so disastrous, the speech would have been comedy gold. The history of Obama’s promises on the economy is a case study in cognitive dissonance, with promise after promise, then failure, then excuses and accusations. The only thing consistent when it comes to Obama and the economy is that when his predictions prove elusive, it comes as an “unexpected” shock to him and his diehard supporters in the media.
At issue is the jobs report issued by the Department of Labor for June, which reveals that a cadaverous 18,000 jobs were created for the month, 83 percent less than the 105,000 jobs predicted. The “unexpectedly” low jobs growth contributed to the rise in the unemployment rate, which rose to 9.2%. To put this in perspective, economists say that we need to create 125,000-150,000 jobs per month just to keep up with population growth, and we need to be creating roughly 300,000 jobs per month to begin seeing strong economic growth. The news was made even worse by the revelation that far fewer jobs had been created in May than originally reported, which was also “unexpected”.
Shortly after taking office Obama used the fiscal crisis to ram through the “stimulus” package, which we were told would keep unemployment below 8% if passed, and warned that unemployment would go as high as 9% if it did not pass. We passed it, and in the nearly two and a half years since, unemployment rose from 7.8% in January 2009 when Obama took office, to 10.1% in October 2009 (a full eight months after the bill was signed into law), hovered just below 10% for a while before dipping to 8.8% in April 2011. Unemployment has ticked up every month since, and Obama’s own Treasury Secretary warns that it could be more than five years before we see a drop to Bush-era unemployment levels.
Last week, it was announced that unemployment had risen .1%. The economy only gained 54,000 jobs. The Dow was moving in the wrong direction, which affects millions of Americans who don’t remotely qualify as “rich”. What does all of this mean? It’s simple. That’s the idea that we’re in a recovery has as much basis if fact as unicorns and leprechauns.
While we may not be having the collapse we were just a couple of years ago, we’re clearly not in anything approaching a recovery. In a recovery, people go to work. The stock markets builds. Things start moving in a much more positive direction. However, that just ain’t happening.
Instead, we have a great deal of instability. While unemployment may improve over several months, it can then drop over the next month or two. Even with a generally downward trend, that instability doesn’t exactly engender confidence in the US economy.
Things are rough all over though. Greece is looking to the EU for yet another round of bailouts (and people are already protesting the necessary austerity measures to go along with it). Portugal has had a recent change in government due to their economy as well. No one seems to really be doing well.
Now, it’s easy for people to see a couple of indicators and say “See? It’s getting better.” Honestly, I wish that was the truth. However, that just ain’t the case. Instead, those are false indicators of recovery…or so they seem at this point. Had indicators improved over a longer period of time, it might have been fine. Instead, investors are unsure what they should be doing with their money. They seem to decide that it’s best to just sit on their money for the time being. That means money isn’t being invested, money needed to create new jobs.
As has been speculated, the unemployment numbers for May show a slowing job market and an unemployment rate that has increased to 9.1%; according to figures released this morning by the Bureau of Labor Statistics:
The U.S. economy may be in for a prolonged period of soft growth as employers hired the fewest number of workers in eight months in May and the unemployment rate rose to 9.1 percent.
Nonfarm payrolls increased 54,000 last month, the Labor Department said, fewer than the most pessimistic forecast in the Reuters survey and just over a third of what economists had expected.
The employment report which showed broad weakness confirmed the loss of momentum in the economy already flagged by other data from consumer spending to manufacturing, and stoked fears the economy could be facing a more troubling stretch of weakness than had been thought.
“There are plenty of reasons to expect the third quarter will be better. But the question is now becoming how much better?,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.
Economists had pinned the economy’s sluggishness largely on high energy prices, supply chain disruptions stemming from Japan’s earthquake and tornadoes and flooding in the U.S. Midwest and South. The department said it found “no clear impact” from weather on the jobs figures.
The private sector, which has shouldered the burden of job creation added just 83,000 jobs, the least since last June, while government payrolls dropped 29,000.
Adding to the gloomy labor market picture, about 39,000 fewer jobs were created in March and April than previously estimated.
Payrolls had been expected to rise 150,000, with private employment gaining 175,000.