Friday, December 23, 2011

Unemployment And Economic News

In case you were wondering how the economy can suck while unemployment continues to decline, here's your answer (emphasis mine):
...the most important sentence isn't a report on something that just happened, but a fresh look at something that's been happening for the last three years. In particular, it's this sentence by the Financial Times' Ed Luce, who writes, "According to government statistics, if the same number of people were seeking work today as in 2007, the jobless rate would be 11 percent."

Remember that the unemployment rate is not "how many people don't have jobs?", but "how many people don't have jobs and are actively looking for them?" Let's say you've been looking fruitlessly for five months and realize you've exhausted every job listing in your area. Discouraged, you stop looking, at least for the moment. According to the government, you're no longer unemployed. Congratulations?

Since 2007, the percent of the population that either has a job or is actively looking for one has fallen from 62.7 percent to 58.5 percent. That's millions of workers leaving the workforce, and it's not because they've become sick or old or infirm. It's because they can't find a job, and so they've stopped trying. That's where Luce's calculation comes from. If 62.7 percent of the country was still counted as in the workforce, unemployment would be 11 percent. In that sense, the real unemployment rate -- the apples-to-apples unemployment rate -- is probably 11 percent. And the real un- and underemployed rate -- the so-called "U6" -- is near 20 percent.

There were some celebrations when the unemployment rate dropped last month. But much of that drop was people leaving the labor force. The surprising truth is that when the labor market really recovers, the unemployment rate will actually rise, albeit only temporarily, as discouraged workers start searching for jobs again. 
The number of people who are 'actively looking' for a job is designated by the White House, so they can pretty much pick whatever number they want.  I believe this is precisely the plan - to artificially tweak the numbers to show a gradual 'decline' in the unemployment rate, combined with the notion that their policies are 'working' and just need more time.  This will sucker the Democrat base -- ignorant people who accept every news report offered to them without a second thought -- and will also snag a number of people from the squishy middle.  The only question is whether or not it will be enough to stem major electoral losses.

Another common theme that's already coming out is that of the 'rich' paying their 'fair share'.  We've talked before about that idiotic statement, but since this is clearly the liberal Left plan, we'll keep hammering away at it some more.  The key to remember is that it's not true.  It's more deception:

A recent report from the Congressional Budget Office (CB0) says, "The share of income received by the top 1% grew from about 8% in 1979 to over 17% in 2007."

This news caused quite a stir, feeding the left's obsession with inequality. Washington Post columnist Eugene Robinson, for example, said this "jaw-dropping report" shows "why the Occupy Wall Street protests have struck such a nerve." The New York Times opined that the study is "likely to have a major impact on the debate in Congress over the fairness of federal tax and spending policies."

But here's a question: Why did the report stop at 2007? The CBO didn't say, although its report briefly acknowledged—in a footnote—that "high income taxpayers had especially large declines in adjusted gross income between 2007 and 2009."

No kidding. Once these two years are brought into the picture, the share of after-tax income of the top 1% by my estimate fell to 11.3% in 2009 from the 17.3% that the CBO reported for 2007.
The larger truth is that recessions always destroy wealth and small business incomes at the top. Perhaps those who obsess over income shares should welcome stock market crashes and deep recessions because such calamities invariably reduce "inequality." Of course, the same recessions also increase poverty and unemployment.

The latest cyclical destruction of top incomes has been unusually deep and persistent, because fully 43.7% of top earners' incomes in 2007 were from capital gains, dividends and interest, with another 17.1% from small business. Since 2007, capital gains on stocks and real estate have often turned to losses, dividends on financial stocks were slashed, interest income nearly disappeared, and many small businesses remain unprofitable.

The truth of the matter is that Obama's policies are driving this economy deeper and deeper into the ground, and a genuine recovery will never take place until he's gone and his policies are rolled back.


Recall these visuals:

What's the one difference when comparing the current recession to every other recession in the past half century?

Barack Obama and his radical Leftist policies, especially his spending.


So don't allow yourself to be distracted when Obama and the Left lie and deceive and point the finger at 'the rich'.

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