By John Ransom
1/7/2012
Although there’s little doubt that job creation is speeding up in the private sector, unemployment is not going down as widely touted by the Bureau of Labor Statistics (BLS). In fact, it’s likely unchanged since the beginning of the recession because the government is deliberately undercounting the workforce to make unemployment appear to go down.
Missing in the latest labor report are at least 1.2 million job seekers who have been added to the civilian population over the last year but not to the work force, thereby artificially deflating the unemployment rate.
Chart by Zero Hedge:
BLS is undercounting the workforce by lowering the Labor Force Participations rates
They are missing in part because the BLS no longer counts people who have been unemployed for so long that they have stopped looking for work. Since 1994 the BLS has discontinued the practice of counting the “long-term discouraged workers” from the workforce. If a worker stops looking for work after a period of time, they are no longer counted in the workforce. That means that government has created a system whereby the longer a jobs recession continues, the less reliable the unemployment numbers become- to the advantage of the government.
In December of 2010 there were just shy of 239 million workers in the civilian pool available to the work force. In the last year, that number has risen by 1.6 million to 240.5 million people. At the same time, the officially-counted workforce as used by the BLS has risen by only 274,000 workers. At a participation rate of 64 percent, that number should be closer to 1.1 million workers. Indeed, over the last year, the participation rate has also dropped from 64.3 percent to 64 percent. In other words, fewer people from the available population are counted as available to the workforce, thereby decreasing unemployment numbers.
In making an apples-to-apples comparison with a year ago, the country should have about 1.2 million more workers in the workforce than the BLS currently calculates. If one accounts for those extra workers, top line unemployment is at 9 percent. But that’s not the end of the deception.
Since the beginning of the recession labor participation rates have gone down from an average of 65.8 percent since 1980 as calculated by Zero Hedge to 64 percent, a rate not seen since the early 1980s. Indeed the persistency of this jobs recession is shown in the precipitous decline in the labor participation rates regardless of where the official unemployment rate has stood.
Just using the average participation rate of 65.8 percent since 1980 supplied by Zero Hedge, there are 4.4 million workers missing from the work force. Zero Hedge predicts that if the BLS keeps dropping the workforce number at the current rate, unemployment will hit zero just prior to the general election no matter how many jobs Obama “saves”.
It won't surprise anyone that as of December, the real implied unemployment rate was 11.4% - basically where it has been ever since 2009 - and at 2.9% delta to reported, represents the widest divergence to reported data since the early 1980s. And because we know this will be the next question, extending this lunacy, America will officially have no unemployed, when the Labor Force Participation rate hits 58.5%, which should be just before the presidential election.
If you can give Obama a Nobel Peace Prize for a non-existent peace, you should also consider an Oscar award for a movie yet to made.
If there were a remake of Dr. Strangelove today, there’d be no better subject than the Obama administration’s deconstructionist assault on truth. The sad thing is that so many people are willing accomplices in that assault.
For this administration, lying is a state of mind; supplying guns to drug traffickers is a noble act; killing healthcare is “saving” healthcare; ignoring entitlement reform is “preserving” entitlements; ignoring laws on immigration, recess appointments, detention of Americans, wiretaps, declarations of war, are all the constitutional prerogatives of the great constitutional law-giver and professor-in-chief, Dr. Strangelove or; How I Learned to Stop Worrying and Love Obama.
It would be hilarious, except it’s not a Hollywood movie.
Obama’s made it the truth.
Or whatever truth means now.
PS- You can read more about this at Mike Shedlock's excellent post on the subject here. Or check in with economist Dan Mitchell at Cato here.
________________________________________
To read another article by John Ransom, click here.
No comments:
Post a Comment