Unemployment and Irrelevant Statistics - the scam most of us understand

Prologue: Below is an article from Paul Craig Roberts related to the latest Unemployment statistics released on Friday. Then there is also an article that was released on Friday. The bottom line is that these two articles go into further detail of what I have been addressing over the last 2 1/2 years. If the trends are allowed to continue, then we are going to see an exponential hockey stick curve of job losses continue to accelerate over the next couple of years. Of course the long term and permanently unemployed numbers will continue to increase, keeping the real unemployment rate artificially low, but these numbers are proving to be irrelevant and only cause the distrust of the government and their self-serving agenda to fester.

The PR stunt that is the production and communication of these delusional numbers are right out of the George Orwell 1984 playbook. These low numbers keep the government from taking the urgent action that is needed and necessary. The lack of empathy and honesty directed towards the working class is not going to end well for the rulers and narcissistic elite of the nation. Common Sense tells us that.

The Official Unemployment Rate; an "Official" Lie KINGSTON, NY, 7 February 2011 — Do you believe Friday’s government report that the unemployment (U.3) rate fell last month from 9.4 percent to 9.0 percent? How could the rate decrease when January only saw a reported increase in payroll employment of 36,000 jobs when some 150,000 new jobs are needed to be created each month just to stay even with population growth? According to Friday’s Bureau of Labor Statistics report, a 0.4 percentage point decline in the unemployment rate means “the number of unemployed persons decreased by about 600,000.” Where did the other 564,000 January jobs come from as they cannot be found in the reported jobs data? The jobs are phantom jobs created by faulty seasonal adjustments. As statistician John Williams (shadowstats.com) puts it, “the extraordinary severity and duration of the economic duress in the United States during the last three to four years has destabilized traditional seasonal-factor adjustments and the related monthly reporting.” In other words, the 564,000 people are, in reality, unemployed and are not employed in the non-existent seasonally-adjusted jobs that the government added to the numbers. Williams reports that the unadjusted data show that “the employment rate rose in January.” It’s BLS magic. Unemployment rose, but the unemployment rate fell. Washington pulled the same stunt last month. Using this government ploy, theoretically, the U.S. could have a zero unemployment rate while the entire population is out of work! Don’t expect the financial press to tell you what this Trend Alert just told you. In response to the cooked numbers, Bloomberg quoted economists, whose job is to hype recovery, that “we’re setting ourselves up for a pretty strong improvement in payrolls.” (4 February 2011) According to John Williams, even the measly 36,000 job gain is an illusion created by the faulty “birth-death” model, which guesses that new startups add more jobs each month than business failures subtract. This might sometimes be true, but not during an economic downturn. Without the jobs added by this faulty estimating technique, “the reported January 2011 payroll gain of 36,000 would have been a decline of 52,000!” Indeed, the BLS “birth-death” model’s over-estimate of payroll jobs results in quiet annual revisions in the number of employed. In Friday’s employment report, largely unnoticed by the financial press, the BLS reports in its benchmark revision that there were 483,000 fewer people employed in December 2010 than previously reported. The U.3 unemployment rate is the headline rate. It receives all the media attention, because it only measures 40 percent of the unemployed, thus making the recession look smaller than it really is. No discouraged workers who have given up looking for work are included. The government has a more complete measure of the unemployment rate known as U.6, which includes the short term discouraged (less than one year). That rate is16.1 percent. John Williams adds in the long term discouraged, which brings the true rate of unemployment to 22.2 percent. Economists have no known way of explaining how an economy, in which millions of manufacturing and professional service jobs have been offshored, can compensate for the lost American incomes and purchasing power. The profits from offshoring flow to a narrow segment of the population consisting of corporate management, shareholders, and Wall Street. These income flows cannot replace the millions of lost incomes and careers of those whose jobs have disappeared. There is a limit on the ability of the mega-rich to buy and to consume. The consumption of a few people cannot drive an economy. This is why the concentration of income and wealth in a few hands kills an economy. For a decade the American economy has been driven by private debt accumulation. Today policymakers in Washington are trying to drive the economy with public debt accumulation. The plan cannot succeed. The annual budget deficit of the U.S. government is being financed by the Federal Reserve by creating new money. For now, because of the impaired condition of U.S. financial institutions and the over-indebtedness of the American population, the money injected into the financial system by the Federal Reserve is not being lent. The banks need the reserves to bolster their solvency and consumers are too indebted to borrow. Thus, the money multiplier has collapsed, preventing the Federal Reserve’s money creation from resulting in rapidly increasing inflation. More BS from the BLS Just as the unemployment rate is understated, so is the Consumer Price Index. The CPI no longer measures the prices of a fixed basket of goods, but assumes that people substitute cheaper items for those that rise more in price. Moreover, inflation can also arise from decline in the dollar’s exchange rate vis-a-vis other currencies. With the dollar being the world reserve currency, many commodities are priced in dollars. As more dollars are being created than other currencies, food and commodity prices are rising as a result of the dollar’s falling exchange rate. The Fed chairman says that he can avoid inflation when it appears by pulling the excess money out of the economy by selling bonds. But the Fed can sell bonds only by lowering bond prices, thus raising interest rates. What do you think happens to the depressed U.S. economy if interest rates rise? Stocks and whatever remains of the housing market would collapse, as would the bond portfolios of whatever remains of Americans’ pension funds. The remnants of the investment incomes of ordinary people would be wiped out. In other words, the Fed believes it can control the inflation, whose seeds it is planting, by wiping out the remnants of the wealth, and the income from it, of ordinary people. This tells you all you need to know. by Paul Craig Roberts

©MMXI The Trends Research Institute®

Find A Job? Good Luck In This Economy – 10 Reasons Why The Latest Unemployment Numbers Are No Reason To Cheer - The Economic Collapse Blog - February 4th, 2011 - The U.S. government is telling us that the unemployment rate fell all the way down to 9.0% in January. Should we all cheer? Is it now going to be a lot easier to find a job? Has the economy finally turned around? Are happy days here again? Well, it is a good thing to have a positive attitude, but the truth is that there is just not much to cheer about when you take a closer look at the recent unemployment numbers. First of all, the U.S. economy only added 36,000 jobs in January. Economists had been expecting an increase of about 145,000 jobs, and an increase of 150,000 jobs per month is necessary just to keep up with population growth. So why did the unemployment rate go down? Well, the government says that over half a million Americans suddenly dropped out of the labor force in January. That doesn't make a lot of sense, but this is how the government calculates their numbers. So what happened to those 500,000 Americans? Did they all win the lottery? Have they all become independently wealthy? Did they all die? No, the vast majority of them are still around and the vast majority of them still desperately need jobs. It is just that the government does not count them as "looking for work" anymore.

It would be great if the employment situation in America actually was getting better. All the time people send me absolutely heartbreaking stories about what they have had to endure in this economy. Soon I hope to share some of those stories with you all. It is hard to try to describe the absolute horror that many Americans are going through right now.

People would like to believe that things are going to get better, but unfortunately that is just not going to be the case. The government can try to massage the numbers to make them look better, but the truth is that the tens of millions of American families that are deeply suffering right now are not fooled.

The following are 10 statistics that reveal that the latest unemployment numbers from the government are no reason to cheer....

#1 According to CNBC, economists were expecting the U.S. economy to add 145,000 jobs during January. Obviously the 36,000 figure was a huge disappointment.

#2 Approximately 150,000 jobs need to be added to the economy each month just to keep up with population growth.

#3 The government jobs report also indicated that 504,000 Americans "dropped out of the labor force" in January. That may make the unemployment numbers look better, but the truth is that the vast majority of those 500,000 Americans still need incomes and still need jobs.

#4 According to the latest numbers from Gallup, the unemployment rate actually increased to 9.8% at the end of January.

#5 Gallup's measure of "underemployment" (those that are unemployed plus those that are working part-time but want full-time employment) was sitting at 18.9% at the end of January.

#6 As I reported yesterday, there are approximately 28 million Americans that would like full-time jobs but that don't have full-time jobs.

#7 According to Zero Hedge, the number of Americans that are "not in the labor force" but that would like a job right now has hit an all-time record high. If you add all of those people into the official unemployment figure it would jump to 12.8%.

#8 According to Calculated Risk, this is the deepest and most brutal employment downturn that the United States has experienced since World War II. The current employment downturn started 37 months ago and there doesn't seem to be any indication that we will return to pre-recession levels any time soon.

#9 The U.S. Labor Department has also announced that job growth during 2010 was much weaker than they had previously reported. The numbers for 8 months were revised down, and the numbers for 4 months were revised up. After all of the revisions are accounted for, it turns out that a total of 215,000 fewer jobs were created during 2010 than originally calculated.

#10 According to one brand new survey, 4 out of every 10 Americans are struggling "a lot" to pay the bills right now.

The situation is not pretty out there. The U.S. needs tens of millions more jobs than we have right now.

So where are all of our jobs going? The video posted below contains some very strong hints. The truth is that globalism is ripping our economic infrastructure apart, and all of the crazy rules and regulations we keep heaping on business are not helping either....

U.S. workers have been merged into a "global labor pool" where we are expected to directly compete for jobs with people making slave labor wages on the other side of the globe.

The more time you spend thinking about that, the more you start realizing that the standard of living of average American families is going to continue to decline.

Unfortunately, as I wrote about in a recent article entitled "Nothing Is Stable Anymore", the world is changing faster today than at any other time during our lifetimes. Everything that we used to assume about employment, money, our economy and our finances is being turned upside down. We now live in a world where very little can be taken for granted.

2011 has already been a very tumultuous year. The world is being transformed. Nobody knows for sure what is going to happen next.

One thing to really keep an eye on is the price of oil. Right now, large numbers of investors are betting that the price of oil will rise to $125 a barrel by May. Shockingly, some investors are even betting that the price of oil will rise to $250 a barrel by next December.

If oil starts to spike dramatically, it will have tremendous implications for the U.S. economy. Our entire economic system runs on oil. The price of oil affects the price of everything else.

If the price of oil keeps going up it is inevitably going to cause a slowdown in the U.S. economy and it will cause the unemployment situation to get even worse.

So be glad that the employment situation is at least somewhat stable for now, because if things take a bad turn for the worse in 2011 who knows what kind of unemployment numbers we'll be talking about a year from now.

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