Latest Economic Trends, Statistics, and Opinions, October, 2012 - Part 1: 23 Million Unemployed/Underemployed Americans, Record High Food Stamp Applicants, and More Bad News

Every month this year we have been reviewing the latest economic and financial data, trends, and expert opinions regarding where poor economy is and where it is going. We will to that again over the next two days, starting with the latest unemployment data that was released last Friday. Tomorrow, we will review some other data along with the opinions of experts in the field of economics and finance.

On the surface, government reports last week looked encouraging, basically because it estimated that the unemployment rate had dropped down below 8.0% and was now at 7.8%. This was good news, especially for Obama’s reelection effort, since the country had suffered through 43 consecutive months where the official unemployment rate was over 8%.

To understand how bad this record is. Consider the following fact: from Harry Truman through the George W. Bush Presidencies, the total number of months since the Truman administration when U.S. unemployment rate was over 8% totaled ONLY 39 months. Thus, having finally gotten below 8% should be good news.

However, 7.8% is not really the good news one would think it is. First, there are many accusations flying around that the administration may have “cooked the books,” i.e. falsely adjusted the unemployment rate estimate to benefit Obama’s reelection campaign. The basis of this suspicion includes the following:

• For every week this year, the number of Americans filing for first time unemployment benefits has consistently been between 350,000 and 380,000 people per week. Since this should be a leading indicator of unemployment, the fact that this trend did not change throws some suspicion on the latest unemployment rate estimate.
• The number of Americans on the food stamp program is at an all time high, another indication that a lot of Americans are not finding jobs.
• There were no major corporate announcements of hiring expansion and surveys of small business owners indicate that they are not in the hiring mode so where did these jobs come from?
• The Obama administration has been caught in any number of lies during its tenure so it would not be that surprising if the numbers had indeed been falsely stated

But even if the sampling technique and analysis that resulted in this seemingly low unemployment rate estimate is legit, let’s see how bad things are when you get underneath this top line number. The following stats and analysis come from the Bankrupting America website and various Associated Press articles:

• Even if the 7.8% estimate is real, that same estimation process would show that there are 12.1 million Americans who are still unemployed, three years after the so-called recession ended and the recovery began, making this the weakest recovery ever.
• The 7.8% is an estimated rate of people who are currently employed and who are still actively looking for work. It does not count the number of Americans who have become so discouraged that they have literally given up looking for a job. The Bureau of Labor Statistics has a broader measure of total labor underutilization which estimates a more comprehensive unemployment rate called U-6.
• The U-6 unemployment rate is often referred to as the rate of “underemployment.” This measure includes the total unemployed, plus those who have given up looking for work, and those who are working a part-time job but want full-time work.
• This more comprehensive measure essentially looks at the percentage of the civilian labor force that would choose to have a full-time job if economic conditions were more positive. It gives a much fuller picture of what is going on in the labor and job market.
• If we use this better U-6 process of estimation, today there are 23 million Americans still looking for work, almost twice the number of unemployed and underemployed Americans that the traditional, restricted measure of unemployment provides.
• In January 2009, when Obama took office, that figure was 22 million. Thus, under this better description of unemployment, things have gotten worse, not better since he took office and the recession ended.
• Not unexpectedly, he U-6 unemployment rate has jumped from 14.2 to 14.7 percent during that period of so-called recovery.
• When we examine at the number of individuals employed, from January 2009 until today, there are 61,000 fewer individuals employed across the U.S.
• From a long term unemployment perspective, out of the 12.1 million individuals looking for work under the restricted definition of unemployment, 3.4 million Americans have been out of work for over a year and are still looking.
• For all unemployed Americans, the average amount of time spent from time of unemployment until being hired in a new position has nearly doubled since 2009, rising from 19.8 weeks to 39.8 weeks, despite the so-called recovery from the recession.
• Unemployed individuals experiencing many months of unemployment and no income can suffer from severe economic hardships and thus, it should not be a shock that a record number of Americans are receiving food stamps.
• As of the end of August 2012, nearly 47 million Americans were on food stamps. Additionally, recent surveys reported that nearly 1 in 6 Americans were living in poverty in 2011, the highest rate in two decades, despite the so-called recovery.
• The BLS reported that nonfarm payroll employment rose by 114,000 last month. At this rate, it would take almost 17 years to wipe out the underemployment of 23 million Americans, assuming that no currently employed Americans lost their jobs.
• A separate report from Reuters supported all of the above data but also reported that two thirds of those Americans who found a job month could only find a part time job, a finding that takes some additional shine off of the drop to 7.8%.
• Reuters also quoted former General Electric chairman Jack Welch who also accused the administration of adjusting the numbers for political purposes.

Yes, getting an unemployment measure down .3% is a good thing for America:

1. But the better measure of unemployment, the U-6 rate has not improved since January, 2009, the month this administration took over control.
2. The rate of job creation is not fast enough to get full employment down to a respectable level for well over ten years.
3. The number of Americans who the government still think deserve food stamp assistance is still at record high levels so an improving job market has not affected that economic measure of distress.
4. The economy and hiring picture has not gotten much better relative to the Federal Reserve Board who plans to print money via quantitative easing for an undetermined amount of time to help the economy.
5. It takes longer to find a job for an unemployed American since January, 2009 despite the recession ending years ago.
6. In total, there are fewer Americans officially employed than in January, 2009 even though the recession ended in 2009 and 114,000 jobs were created last month.
7. And regardless of what the administration claims, it also reports that more than 350,000 Americans are filing for first time unemployment benefits every WEEK. How this monthly rate of at least 1.4 million first time filers in conjunction with a monthly job creation rate of 114,000 can actually reduce the unemployment rate stretches the limits of believability, integrity, and credibility.

Yes, any improvements in unemployment is good news, no matter how small. But until the Washington political class and this Presidential administration understand that they need to reduce the tax burden and streamline the tax code, reduce government spending short term and the overall national debt long term, remove the uncertainty in the minds of businesses from the so-called fiscal cliff perspective, reduce the tons of unneeded regulations, repeal the dozens of taxes and thousands of regulations of Obama Care, and just get out of the way, small improvements is all we can expect.

Tomorrow we will cover some other economic trends and stats along with expert opinions. Unfortunately, the picture they paint will not be any different to the underlying crisis we have outlined above.

We invite all readers of this blog to visit our new website, "The United States Of Purple," at:

http://www.unitedstatesofpurple.com/

The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.

The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of our times.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedomfor both yourselves and others everyday.

Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment