Friday, November 06, 2009

10.2% Unemployment? An Historical Perspective

Would someone please inform the Associated Press that a working knowledge of American history is essential for reporters attempting to cover the nation today!

Today's report on the (shocking!) jobless rate of 10.2 percent contains numerous egregious examples of historical cluelessness. And that's the most positive spin. A more negative assessment is that the AP writer and his editors know fully well that they are disseminating partial truths and mendacious inaccuracies.

The first problem occurs in the lead sentence: "The unemployment rate has surpassed 10 percent for the first time since 1983 -- and is likely to go higher."

This is not quite true. During the Clinton years the unemployment data were tweaked to separate those who recently lost their jobs from those who have given up looking for work. Before 1994 all were lumped together. So to be accurate, it must be said that the 1983 unemployment number was about 7.5 percent BETTER than today's report! The AP hides this contraction in plain sight a little later in its report:
Counting those who have settled for part-time jobs or stopped looking for work, the unemployment rate would be 17.5 percent, the highest on records dating from 1994.
It should also be noted that a percent of the work force today represents a lot more people than in 1983. And vastly more than 1933, which is the time-line you would have to travel to see unemployment data comparable to what we are seeing now.

Reporter Christopher Rugaber wastes no time in committing his second error: the second sentence. He echoes White House spin as fact.
Nearly 16 million people can't find jobs even though the worst recession since the Great Depression has apparently ended.
Yes, the Obama faithful are claiming the recession is over by massaging the numbers for the 3rd Quarter by ignoring the fact that Cash for Clunkers and the first-time home-buyers credit, both fully subsidized by the taxpayer, created enough of a bump to make it appear that the economy is on the mend. Government cannot spend us into prosperity when the private sector cannot obtain financing from banks wary of government meddling. The reporter's willingness to accept the Geithner/Obama spin with no qualification -- "apparently" is not a qualification, it's acceptance -- is poor journalism.

The reporter does not adequately explain to us why the economy shed 190,000 "net" jobs yet some 600,000 more Americans are out of work:
The Labor Department said Friday that jobless rate rose to 10.2 percent, the highest since April 1983, from 9.8 percent in September. The economy shed a net total of 190,000 jobs in October, less than the downwardly revised 219,000 lost in September, but more than economists expected.

The jump in the jobless rate reflects a sharp increase in the tally of unemployed Americans, which rose to 15.7 million from 15.1 million. The net loss of jobs occurred across most industries, from manufacturing and construction to retail and financial. That tally is based on a separate survey of businesses.
It isn't so much of an explanation but acceptance of the government's use of the lesser figure.

But Rugaber does gives us some humor as he quotes Dan Greenhaus.
"It's not a good report," said Dan Greenhaus, chief economic strategist for New York-based investment firm Miller Tabak & Co. "What we're seeing is a validation of the idea that a jobless recovery is perfectly on track."
Jobless Recovery. Another innovation from our current administration.

The fourth egregious lack of historical context occurs as Rugaber does not do a followup on this next quote:
"You need explosive growth to take the unemployment rate down," Greenhaus said in an interview Thursday.

The economy soared by nearly 8 percent in 1983 after a steep recession, Greenhaus said, lowering the jobless rate by 2.5 percentage points that year. But the economy is unlikely to improve that fast this time, as consumers remain cautious and tight credit hinders businesses.
In 1983 President Ronald Reagan twisted the arms of a Congress controlled by Democrats to lower tax rates and open up domestic energy production. An economic boom began that, even though tempered in 1986 by higher tax rates when the Progressives in Congress struck back, continued largely through the '90s.

Instead, we see the Bush tax cuts about to disappear next year, and new rounds of tax hikes in the pipeline as Obama and the Progressives push for expensive new programs on health care and energy.

But the AP's economics writer leaves these facts undisturbed and his younger readers in the dark.

So you have to ask: Is the AP treatment by accident or design?

Either way, it's disgraceful and unworthy of a once great news-gathering operation.

The truth of our national economic crisis is buried near the end of the article:

October was the 22nd straight month the U.S. economy has shed jobs, the longest on records dating back 70 years.
There are records that go back beyond 1939, but apparently the reporter does not want to use them. He doesn't even use "1939" as a benchmark. My guess is that he doesn't want to remind anyone that we are in "Great Depression" territory.

But we are.

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