Mainstream media and Wall Street are salivating over the Bureau of Labor Statistics’ latest job growth numbers, which suggest that unemployment is on its fastest decline since the recession began in 2008:
MSNBC: Employment growth picked up speed in November; jobless rate fell to 8.6 percent
Employment growth picked up speed in November, pushing the nation’s unemployment rate down to 8.6 percent — its lowest level since March 2009.
Private employers added a net gain of 140,000 jobs in November, but governments shed 20,000 jobs, mostly at the local and state level. Governments at all levels have shed nearly a half-million jobs in the past year. The Labor Department revised up its job gains for September and October by 52,000 and 20,000, respectively.
“The labor market is gradually healing. It’s a glacial pace, but we are taking small steps in the right direction,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Penn.
If you stopped reading right there you’d think our government’s stimulus infused, debt ridden interventionist policies have solved the worst crisis since the Great Depression.
There are three kinds of lies, wrote Mark Twain in 1906, “lies, damned lies, and statistics.” Take a page from his book and consider that the latest unemployment report is nothing more than an attempt by the custodians of our government, who are increasingly coming under fire from the populace, to hide the fact that their grand plans for centralizing social, financial and economic control are failing miserably.
The Head Lies could have just as easily read “315,000 give up searching for jobs and officially leave the workforce,” but that doesn’t play into the narrative, and we need to maintain appearances. How else are we supposed to keep the Dow Jones cranking amid a collapsing global economy?
This is a warning to our readers that trusting the Bureau of Labor Statistics could be dangerous to your financial health and personal well being.
Here are six reasons why these numbers, although seemingly positive at first glance, don’t hold a lot of weight for the nation’s long-term out look.
1) Tens of thousands of people have given up searching for work, so they don’t count as part of the labor force anymore
When people stop looking for work they are considered to no longer be participating in the labor force, which means that the BLS ratios are adjusted to reflect a better overall employment rate:
The fall in the jobless rate was aided by 315,000 people leaving the workforce. That pushed the participation rate, a ratio of the amount of the population in the labor force, down to 64.0 percent. Those who exited the workforce, many of whom gave up on looking for work, outnumbered the 278,000 people who found jobs, according the Labor Department’s household survey, which is separate from payrolls data.
Karl Denninger of Market Ticker provides some insight:
There’s a fairly serious problem with the numbers, and it’s not in the headline — it’s in the only number that matters from a fiscal perspective for the government — and there, it’s bad news. Even worse, there is some real serious misdirection going on in here, me thinks.
So those not in labor force aren’t re-entering the labor force. That’s not so good; remember that you need about 125,000 people to find jobs a month to keep up with the population.
That’s the labor participation rate which is all that matters for the ability of government to collect taxes — since all taxes are paid by people, and if you’re not working, you’re not paying taxes.
And that number, my friends, is down on the month.
Not by a lot, but down.
So what we have here is a report that is nowhere near as strong as it appears.
2) Many of the jobs created are likely seasonal
As retailers got sold a bill of goods about the economic recovery, they hired more workers for the holidays. Chances are that many of those jobs are temporary:
More than half the jobs added last month were by retailers, restaurants and bars, a sign that holiday hiring has kicked in. Retailers added 50,000, the sector’s biggest gain since April. Restaurants and bars hired 33,000 workers. The health care industry added 17,000.
On top of that, retail and restaurant jobs will be the first to go once employers realize that we are in negative GDP growth territory.
3) The government’s more realistic measure of unemployment is still above 15%
There are several ways the government measures employment data. The “U-6,” which is the broadest available measure, counts the total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.
According to the BLS, this statistic decreased from the previous month, but is still sitting at a whopping 15.6%.
4) The Unofficial unemployment rate remains in Great Depression territory.
Over the years the government has created all sort of formulas and methods of calculating statistic like unemployment to provide a watered-down, best-case version to the general public, especially in times of crisis. In reality, however, if we were to calculate unemployment numbers the way they were counted as recently as 1994, we would be looking at a starkly different picture.
According to John Williams of Shadowstats.com, the actual unemployment rate in the United States is in excess of 22%. That’s one in five Americans who are without meaningful labor.
5) Europe’s debt, monetary system and the stability of their Union is on the brink of collapse
Over the last several months we’ve seen what happens to global stock markets when the European debt crisis hits the news cycle. European and US central banks have been able to stave off a complete meltdown for now, but it’s becoming increasingly clear that they won’t be able to hold the center much longer. The EU as we know it today will not exist in its current form in the very near future. When their monetary and financial systems collapse there will be a substantial financial and economic impact here in the United States. Those are Federal Reserve chairman Ben Bernanke’s words, not ours.
Take a guess how employers will react if stocks have half of their value shaved off. It doesn’t bode well for the unemployment situation.
6) Consumers are spending, but they are spending from savings not income.
The primary reason why employers hire more laborers is because they are growing. GDP is growing sluggishly by official accounts (and is in negative territory when adjusted for inflation). Consumers, it seems, are still spending. But an alarming report says that “consumers spent more while earning less. Many had to dip into their savings to make up the difference.”
Once these consumers realize they are making less money and essential goods cost more than ever before they will begin pulling back on discretionary spending, either voluntarily or by market forces. When revenues drop as a result, so too will employment growth.
Things may look good on the surface, especially when the government’s cheerleaders step up the intensity like they have today and the hopium pushers dish out more mainline optimism to unsuspecting consumption addicts the country over. In reality, however, not much has changed. The unemployment numbers remain abysmal and our economy teeters on the edge of complete collapse.