I’m predicting that, by Election Day, 2012, the unemployment rate will be in the mid-7′s but that thoughtful people will look at that as a negative. Yes, there’s a hint of sarcasm with that statement but it’s based on the fact that part of Friday’s job report isn’t getting the attention it should. Rick Santelli’s got it right with this report:
Here’s CNBC’s transcript of the video:
CNBC’s Rick Santelli: You know what I said at 8:30 Eastern? We want a million jobs an hour. That’s what we want. What we got looked like a good report. I said, ‘Let’s get the calculator out,’ and I did. And so did a boatload of my sources and big blogs that many people read like Zero Hedge. The labor force participation rate, if you look at non-seasonally adjusted, a fresh low going back to April of ’83. If you look at seasonally adjusted, a fresh low participation rate going back to December of ’81. What does that mean in English? Shrinkage. Shrinkage. 1.2 million people are now not considered unemployed anymore. They just have left the system. So, we need to concentrate on the internals, and eventually we want to watch the fixed income market to see if some of this sets in as people do their ciphering.
Listen, if I talk about a stock that had a great report, but I don’t point out the fact that there was a one-time tax credit that did it, am I doing my viewers a service or a disservice? Listen, when you look at the body counts on the establishment survey, we created jobs. That’s a good thing. There’s my perk. But I’m sorry, if you look at the other side, you look at the household survey, yes, we had this big seasonal adjustment. You can go to the BLS, you can see their economic release, you can see their situation summary. And we can see that ‘not in labor force’ moved from about 86.6 million to 87.8. There’s your 1.2 million. And we do see the asterisk, there’s been an adjustment on population. That’s the way it goes. We make an adjustment. The last 12 months needed to be adjusted. It is what it is.
Creating 243,000 jobs is a positive thing that can’t be spun as anything but positive. For those families, it’s a good day. Here’s hoping they can pay off their debts and start setting their financial house in order. Here’s hoping that they start laying the foundation for a prosperous life.
Another thing that can’t be spun, albeit this time as a negative, is the fact that 1,200,000 people quit looking for work. That’s anything but a positive. For those 1,200,000 people, they’re still facing terrible times. Their mortgages are still under water and they’re facing foreclosure. Their debts are still stacking up. They’re having difficulty making ends meet.
They’re no way to spin that as positive. Still, that’s precisely what this administration is attempting to do:
The unemployment rate fell 0.2 percentage point to 8.3%, from a high of 10% in October 2009. The drop in unemployment over the month was entirely due to employment growth, as the labor force participation rate remained constant, once new population weights are taken into account. The unemployment rate has fallen by 0.8 percentage point in the last 12 months. Private sector payrolls increased by 257,000 jobs and overall payroll employment rose by 243,000 jobs in January. Despite adverse shocks that have created headwinds for economic growth, the economy has added private sector jobs for 23 straight months, for a total of 3.7 million payroll jobs over that period. In the last 12 months, 2.2 million private sector jobs were added on net. Nonetheless, we need faster growth to put more Americans back to work.
Before I get to the statistics, can’t the White House find someone capable of putting out their message without using that big of paragraphs? They should start a new paragraph with “Despite adverse shocks…”
As for the “unemployment rate [falling] by 0.8 percentage point in the last 12 months”, much of that has to do with the fact that people know that there aren’t jobs out there for them. As a result, they’ve quit looking for work. This is the key part of Santelli’s analysis:
The labor force participation rate, if you look at non-seasonally adjusted, a fresh low going back to April of ’83. If you look at seasonally adjusted, a fresh low participation rate going back to December of ’81. What does that mean in English? Shrinkage. Shrinkage. 1.2 million people are now not considered unemployed anymore. They just have left the system.
I haven’t done the math but I’m betting that the unemployment rate would be north of 10% if they measured the rate by using the January, 2009 labor participation rate. In fact, it might be substantially more than 10%.
If you factor in the people who’ve quit looking for work, it’s quite possible that the unemployment rate hasn’t moved noticeably since the stimulus was passed. With that type of ‘performance’, what’s the logic behind staying the course with this administration?
This administration’s policies have been disastrous. They keep touting how many private sector jobs have been created since the recovery started. What’s interesting is that that number is consistently more than the total number of jobs created.
That’s because we’re running trillion dollar deficits. Those deficits are a direct result of the real unemployment, the one that’s driven by the 2009 participation rate, not today’s participation rate.
Until the participation rate starts improving and job growth starts increasing, the U.S. economy will be stuck in neutral. That’s hardly anything to smile about.
Tags: Labor Participation Rate, Unemployment, Job Growth, White House, Spin, Stimulus, Democrats, Rick Santelli, CNBC, TEA Party
I complained to someone today about the fact that most people “only notice the ‘official’ number” (and not the fact that a net 1 million jobs were LOST FOREVER last month). The response was that “people don’t care what the official numbers are, they go by whether they or their neighbors are still out of work, and that’s getting worse. Everybody knows somebody that’s been out of work for a long time and that’s how they’re going to vote.” It’s a hopeful interpretation and I like it.
Obama = Better than Bush.
You guys had your chance.
Horsed it up big time.
Look what you guys handed to Obama-Biden. You offer more of the same? No thanks.
What were all those Bush tax cut “job creators” doing?
Leveraging, and investing in China.
Taking working companies down, Romney-style.
Give me a break.
Eric, Obama is the worst president ever. He inherited a recession, then turned it into the Great Recession. He’s worse than Carter & that takes some doing.
If Obama is that great, why is it that he’s constantly bailing out local governments? Hint: Because this administration’s policies suck.
Obama inherited the greatest depression since Roosevelt had to clean up after Hoover. And has had the Republicans stymieing every effort to fix things, or at least institute improvements. They bellow. They rage. They impede. They posture. They are not part of any solution. I grant you he inherited Bernanke, and should have not given him any additional term, but did. That was an error. The Fed is not helping fix things either.
Obama is not great. But Gary, to say he is worse than Bush is pure fantasy. Denial. Abject partisanship for its own purposes. The only way Obama can get anything useful done is by executive order and recess appointments.
I grant you, on attempting to do something positive about healthcare the end result was/is inadaquate, but Obama is not responsible for the Montana senator, Lieberman, or the Blue Dogs. Had there been more progressives to assist, some of the best options would not have been off the table at the start.
Public option, single payer, and strong bargaining with Big Pharma were off the table, because of opposition politics. With that, of course Romney’s approach was all that was left – a half-assed attempt at addressing something Canada and all of Europe sanely manage one way or another.
On the economy, the bleating faction, postured about deficit; not jobs, not exchange rate impacts, not how prices of everyting but labor in the US would rise.
And, it was Bush that made the too big to fail shysters bigger, via merger/takeover. Obama inherited that.
He’s been a big disappointment for those who believed him saying “change” but being the same as Clinton and Bush, little different, is no cause to say that corporate raider answers or those of the ethically challenged are anything but a worse bad joke.
Were he have delivered change, I would be better able to defend him. But he’s been identical to Clinton and both of the Bush residents.
What’s needed is a president who will push to reform Wall Street, reintroduce banking regulation as it was before Phil Gramm, and who will consider some of the things Ron Paul is saying about the Fed and about sabre rattling as a default foreign policy, and its outrageous costs. And one who will go back to taxing the rich as was done during the prosperous 1950′s.
Before the Reagan mess-up, before Bush making it worse.
Reagan ran record deficits, only exceeded by the Bush presidents’ war adventuring by borrowing, and Obama has inherited that mess along with the messed up minds that will not admit Reagan was an awful president who made the lives of the 99% worse and made income disparity and wealth as we see it today possible. With collusion from both parties of the two party system, Reagan did this, he did not do it alone, but times were better economically during the Eisenhower and Kennedy years, then Johnson impoverished us to spend on Vietnam, Nixon-Ford handed Carter a basket case that Carter got blamed for; and your guys are doing the same thing again with Obama.
I have no defense of Obama, who is a big time disappointment to progressives; other than your people offer worse “solutions” so that Obama will be reelected despite his inadequacies – much as with Clinton when the Doles were the alternative the GOP had. Bottom line – Obama is mediocre, your guys much more so.
Excuse me? TARP was ill-conceived but it eliminated the financial crisis. That was the only structural thing wrong with the economy. This myth that the 8 years of the Bush administration were destitute years of poverty that progressives have peddled is BS.
It stops here now.
Simply put, the unemployment rates, the GDP growth and the size of the deficits are proof that the progressives’ mantra of “the failed policies of the last 8 years” was BS, not truth.
Unemployment rates were consistently 3 points lower than they’ve been under President Obama.
You can blame part of the deficits on President Bush but saying that he’s responsible for 4 straight years of trillion dollar deficits is BS. You should know better than that.
Bush’s biggest deficit was $460,000,000,000 or about a third of what Obama’s deficits are. There isn’t a thoughtful economist who’d agree that Obama’s deficits are Bush’s fault.
President Obama’s economic plan centers on paying off governments & the unions. There’s nothing pro-growth about it.
The EPA’s & the NLRB’s heavy hands have crippled job creation. Since when did the NLRB have the authority to tell businesses where they can & can’t open manufacturing plants?
That’s the type of oppressive regulations that’s chasing businesses to other countries. What part of that don’t you understand?
As for Reagan, he took the Carter stagflation/high unemployment/high interest rates/misery index economic plan & created 20,000,000 jobs.
If creating 20,000,000 jobs while restoring prosperity & decreasing foreign dependence on foreign oil is your idea of abject failure, then sign me up for that type of ‘failure’.
Both in straight dollar amounts & in percentage of GDP, this administration’s deficits far outdistance the Reagan or Bush deficits. It isn’t even close.
It’s time you opened your eyes to these realities. I’m partisan, yes, but I’m informed by verifiable, trustworthy information, not blind ideology.
It’s time you did the same.