“Happy Days Are Here Again”, Economy-Wise? Don’t Think So
We’ve all seen the recent “unemployment” figures, purporting to show improvement in the US economy.
Yeah, right. And aren’t ye all a wee bit auld to be a’ believin’ in Leprechauns?
A couple of Wall Street advisers say that those figures are, to be kind, grossly misleading. Some might even say that they’re deliberately understated.
The actual unemployment rate, including discouraged workers who have quit looking for work, is well over 10%. Hell, the U6 unemployment rate – which includes both underemployed and discouraged workers – is still over 13%, and has been for over 5 years (since Dec 2008). (For the record: during the Bush (43) Administration, U6 was above 13% in precisely one month – Dec 2008 – and was 11% or higher only 4 months: Sep-Dec 2008.) Finally: the labor participation rate – which measures, oh, the actual percentage of US residents who actually have a job, full- or part-time – in Dec 2013 was 62.8%.
Participation rate-wise, that’s “welcome to Carter Country” territory.
There’s one more little nugget of “good news”. If you’re old enough, you may remember something called a “misery index”. It was popular in the 1970s and 1980s as a way to measure the combined effect of inflation and unemployment.
Calculated using today’s suspect “official” methodology, it comes out at around 7.5%. However, the method of calculation has changed since the 1980s. Inflation is now calculated “differently” (e.g., using a method that comes out with a far lower rate). And the unemployment rate used doesn’t include discouraged workers – you know, those folks who want to work but have been unsuccessfully looking for a job for so long that they’ve simply quit looking.
If the misery index were calculated today using the same inflation methodology used during the 1970s and 1980s and including discouraged workers, it would be 14.7%. That’s higher than it was during the Ford Administration.
Yeah, I don’t think we should be singing “Happy Days Are Here Again” just yet.
Category: Economy
It gets better still. Couple that with the fact that people are now giving Momma Gub’mint a big chunk of change either for health insurance premiums or “fines” (read: taxes, according to SCOTUS) and we have even LESS disposable income. Couple that with the fact that we’ve “recovered” less than 50 percent of the jobs lost in the recession (a record time for recovery of lost jobs since records were kept) and most of them are of the part-time/service-sector (read: lower paying) variety, or if they are full-time, are government jobs, not private sector.
For every job “created” in the private sector, nearly five people are LEAVING the workforce. Think about that sobering statistic. I’ve run into literally dozens of people in their late 50’s/early 60’s who have basically said, “Fuck it–the system is going to collapse in a few years, so I’m getting out early and getting what I can while I still can.” An additional burden on the system which cannot be sustained.
In the 2008-09 recession, family incomes declined by $1200/year. In the five years since in our “recovery summer”, “green shoots”, or whatever you wish to label it, incomes have–drum roll please–declined by ANOTHER $2500/year.
Yup, the average American family is earning nearly $4000/year LESS than what they did when the Democrats took over the House and Senate in 2007. Hopey-changey, indeed.
Couple that with higher food and energy costs (when was the last time you saw gas or hamburger under $3/gallon or $3/lb, BTW? And I just paid $750 to fill my oil tank–one of THREE I need per winter. Yet the property taxes, income taxes, etc., keep increasing. More people chasing fewer jobs that pay less and provide less disposable income.
Happy days are here again…yeah, not so much.
Beyond the obvious direct causes of this current mess there is more to consider. Long term this is one outcome for the nation that is a direct result of Free Trade agreements with what amounts to 3rd world trading partners. Clinton signed NAFTA and proved that crazy little bastard Perot to be correct, that when it’s okay for companies to move manufacturing to locations where there are no real labor rates they will in fact do that. Manufacturing, or the making of things, has always defined this nation and any nation where there is a strong middle class. Intellectual property jobs such as those in silicon valley all sound great but they will not be a replacement for manufacturing. Look at Britain to see what happens when the manufacturing jobs are pretty much all gone, and then look at Germany to see how a nation can prosper by keeping manufacturing within its’ national boundaries. There is no benefit to the nation to have an ever widening gap between rich and middle class, the problem with both parties right now is they see that gap and neither one understands the necessary methodology to repair that situation. The conservatives have an unfailing belief that the dream of trickling down economics will somehow energize the middle class, it worked during the Reagan years because there were no free trade agreements with China or Mexico, consequently that money created small manufacturing firms that provided decent paying jobs and kept the gap between the rich and the middle class at a manageable gap. Post NAFTA and other such agreements there is no benefit to trickle down because it does not create manufacturing jobs, it might create service jobs but those don’t pay the wages that manufacturing jobs provide and they expand the wealth gap. The democrats are worse, they think fixing the problem lies with taking more from the people with the most and giving it to the government as if that has ever solved an actual problem with job production in the history of governments…. I keep hoping one of these so-called businessman candidates… Read more »
And the sad part is that we did it to ourselves…. the bvilians look back at us from the mirror. We wanted our VCRs and computers cheap-cheap-cheap, and the WalMart mentality of wanting the latest goodies for next to nothing has permeated everything. So manufacturing has gone to China etc. (Disclosure – I work for one of those Chinese companies and we have manufacturing campiuses with more than 400,,000 employees at one site!)
The sad fact is the inflexible rule that major wars are won by whoever can manufacture the most. Not the highest technology. Next time around…. we’re screwed. If we go to war with a major industrial nation… better hope Rosetta Stone teaches their language.
I agree with all that has been written, but I may have a tiny ray of sunshine to offer.
The first step, and if it is economically feasible, is to make every effort to buy American. I am NOT advocating buying union made, as far too often anymore, they are part of the problem. Just look for the “Made in the USA” label, too keep and build up, ever so slowly, US manufacturing. HH6 and I both do this.
Over the last several years, it has appeared to me that more and more Americans are finally waking up to the fact that we need to have our manufacturing in country, and the high cost of fuel is getting business to look at bringing various facilities back inside CONUS, also.
Two examples, just off the top of my head are as follows. I recently had to purchase a quarter inch tungsten carbide pattern bit for a project I am working on. The Whiteside Machine Company bits, made in Claremont, North Carolina are a little more, or competitive with other makes (read: made in China, usually), so it wasn’t a very difficult choice.
More spendy was the Christmas purchase of some lucky drawers from Flint and Tender, a Kickstarter start-up I would recommend to folks to go and read their story. They get it. It’s high dollar, but just wait for the sales that regularly are offered. Will the 10-year hoodie really last 10 years? Time will tell, but I’m willing to take a chance if it means I can help bring manufacturing jobs back here where they belong.
Why manufacturing left is complex and I don’t have the time to go into it right now.
Better be careful. If you say something different from the President and his Office of Propaganda, you might be labeled as a racist!
So everyone knows that inflation is much higher than the numbers provided by the government. I wonder why that is? Who is served by reporting incorrect information? Does anybody know what official government behaviors are triggered by high inflation? Manufacturing went overseas because Americans want stuff for cheap, corporation CEOs want to earn large bonuses, and stock market analysts drink from the same trough. If you move manufacturing to China, your costs drop by a lot. If you report high profits because your costs are low but your prices are the same the stock market analysts tell everyone that you are doing a good job and you earn your incentive bonus. Around 1990, the CEO of IBM earned a salary and stock options worth about $120 million in one year. This is not chump change. So when are people in China and India going to be consumers like the US? And while they are not, “industries” in China and India are making gigantic profits of OUR US dollars that we send overseas to buy their stuff and they buying up our companies, equipment, raw materials, and real estate. I’m just an average guy who reads too much but here is my $0.02. The big issue is the loss of capacity and resources, not the jobs. If the plants and equipment were here, we could fire up the plants and put people back to work making the stuff that we all buy. The prices would be higher because it costs more to live here but where is the equipment? We would also need raw materials — iron ore, bauxite, oil, and so forth. We have regulated ourselves so that mills and refineries are not practical. I am in the software business. The great majority of computer programming jobs have moved offshore — mostly to India. Used to be that a guy could come out of college as a computer programmer, get a job for $30k and be earning $70k in five years. Those jobs are mostly gone overseas and the large consulting companies are making huge profits by starting programmers out… Read more »