Jobless rate drops slightly as more Americans stop looking for work Despite spending $787 billion, the economy and unemployment lag

WASHINGTON, DC—The Bureau of Labor and Statistics released June’s unemployment numbers, recording a drop in the jobless rate from 9.7 to 9.5 percent. Good news right? Not so fast. While President Obama and Vice President Biden continue their “Summer of Recovery” fantasy tour, the jobless rate fell because more people have given up looking for work, without those to count into the U-3 index (652,000), the unemployment rate dropped.

Private businesses added 83,000 jobs in June, but the government dropped 225,000 census jobs, bringing the total to 7.9 million jobs lost since the Great Recession began in December of 2007. Though counterintuitive, the unemployment rate drop comes as the BLS reports a net 125,000 jobs were lost in June—again, thanks to those poor U-6 schlubs that have become so discouraged, they’ve stopped looking for work (the U-6 rate stands at 16.5 percent, unchanged from June of 2009).

The president though has a decidedly different take, call it suspension of disbelief, while touting his stimulus as saving the economy in Racine, Wisconsin telling a crowd suffering an unemployment rate of 14 percent, “…every economist who has looked at it has said that the recovery did its job…”

-- Killswitch Politick

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Quarterly growth revised downward by Commerce Department Economic growth was weaker in the last quarter than previous quarters

WASHINGTON, DC--The Commerce Department revised the first quarter's growth downward from 3 percent to 2.7percent. Economists state that quarterly growth should be at least 3.5 percent to keep up with job losses and keep the economy from faltering further. In order to outpace the recession, growth needs to be at least 5 percent on a regular per quarter basis, but in order to out grow the recession, quarterly growth should average between 7 and 9 percent (the same rate sustained for 15 months in the 1980's).

U.S. economist with Capital Economics, Paul Dales, said, "Overall, the U.S. economy may be performing much better than those in Europe, but this is still the weakest and longest economic recovery in U.S. postwar history." By contrast, the economy grew 5.6 percent in the last quarter and most quarters have averaged approximately 3.5 percent, which could be an early indicator the economy is entering a double-dip recession or a W-shaped recovery.

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Jobless benefit claims rise (again) 12,000 new claims put May’s adjusted total up to 472,000

WASHINGTON, DC—Revised unemployment numbers have been released showing a net spike in initial projections of jobless claims for the month of May from 460,000 up to 472,000—undermining recovery projections of the US economy as consumer confidence slides downward.

Economists expect the trend to continue until first-time jobless claims fall below 425,000 per week. 4.57 million Americans continue to claim unemployment benefits but that figure does not include the 5.2 million Americans who are claiming extended unemployment benefits. The most recent data from May 29^th shows that 9.7 million Americans claimed unemployment benefits.

Only 41,000 private sector jobs were created in May (down from 218,000 in the month of April), while the federal government added 411,000 in the form of temporary census worker jobs. Economist Jennifer Lee with BMO Capital Markets said, “We've definitely seen the economic recovery hit a wall.”

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Unemployment rises to 16.8 percent, private sector employees earn less

Washington DC—New unemployment numbers have been released; the U-3 unemployment rate held steady at 9.7 percent in February but the larger unemployment, the U-6 (which includes unemployed, underemployed, and those discouraged from seeking work) rose to 16.8 percent.

The new figures represent a trend that may raise future employment figures to be adjusted upward. At the present time, full employment is 4.7 percent U-3, but that percentage might be increased relative to the long term recession and high trending unemployment numbers.

Amidst the new jobless rate is an administration that is myopically focused on health care reform. In the latest bid to pass the Senate’s HCR through the House, key Lower Chamber members have been given assurance that the bill need only pass in its current form to lay the foundation for an eventual public option.

Public polling still shows a majority of Americans are opposed to HCR and place the economy and jobs as the highest priorities facing the nation. But the White House has sent clear signals that it intends to stay focused on HCR regardless of the state of the economy. The onslaught of government spending has led to the outpacing of government employee salaries to exceed those in the private sector $67,691 to $60,046.


 
-- Owen E. Richason IV
Chief Editor, Killswitch Politick



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A possible FHA bailout and the stimulus’ effect on the jobless rate

The Federal Housing Administration was expected to make public its objective audit determining the soundness of the organization. Several have doubted its security because, as of Oct. 1, its reserve fund fell beneath the required 2% of the agency's unsettled loans for the first time in its history. What’s more, the agency unexpectedly canceled the publishing of that audit report, citing difficulties with the risk scenarios.

Clearly, the FHA’s problems come from the details that the independent auditors ascertained that the risks to the agency were greater than FHA Commissioner David H. Stevens has acknowledged publicly. What's being considered now is whether or not the FHA can re-establish its cash reserves without a government bailout as the agency has faced a growing number of defaults as its loan volume extended.

Unease continues to abound around the national economy as the jobless rate jumped up 0.4 percentage points to 10.2% – the highest level since April 1983 – while the broader U-6 measure shot up even more, rising half a point to 17.5%, a measurement that peaked in 1982 at 14.3%.

The economy lost another 190,000 jobs in October, taking the overall job losses to 3.5 million since January. While the average hours worked in a week remained at 33.0, which means that millions of part-time workers will have to develop into full-time employees before employers start hiring new workers.

With examples such as these in both the public and private sectors, it is difficult to conceive of a starker, definitive, negation of Keynesian stimulus. President Bush’s February 2008 $160 billion-dollar inducement and President Obama’s $767 billion dollar stimulus are proof positive that government spending does not translate into stabilizing the job market nor keep unemployment from rising.

As the accompanying chart shows, Team Obama calculation of keeping the jobless rate below or at 8% has not only not happened, it has actually made worse the situation had they done nothing at all. Once again, testaments to the fact that an entity, such as the government, is not a producer and therefore can only spend what it confiscates from the private sector – the idea that infusing money into failing companies does nothing more than delay the inevitable.

Americans know this to be the case, which is why a clear majority oppose a health care reform that is a precursor to government run health care. It is also why a microcosm of those same American’s chose to change the political tract in two states last week.

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