October, 2014, Part 1 - By The Numbers: Economic Fallacies, Deceptions, and Realities

Every month or so we do a regular feature in this blog called “by the numbers.” rather than believe the drivel and spin that the American political class generates to make themselves look better than their actual performance in office, we go beneath the headlines to look at what is really going on by looking at the underlying numbers of our reality.

I once worked for a boss whose favorite saying was: “there is nothing more devastating to an opinion than the proper number.” that is what we do in this numbers series and what we will try to do today.

1) The Federal government recently announced the latest economic numbers and those in the Obama administration were touting the fact that the official unemployment rate, the U3 unemployment rate measure, had finally gotten below 6%. That’s the headlines but what are the underlying numbers and realities:

• The Obama administration promised that unemployment would be down to below 6% by 2012 because of the $800 billion wasted on the economic stimulus package. Thus, even with the failed stimulus spending, we are two years late at reaching the promised goal.
• These awful unemployment rate results were achieved over the past few years despite having spent the stimulus money, had record low interest rates for a record length of time and enjoyed an energy boom, all of which should have led to an economic boom and record low unemployment.
• The labor force participation rate in September slid from an already three decade low 62.8% to 62.7%.
• This is the lowest rate in over 36 years, matching the February 1978 lows. 
• While 232,000 Americans found jobs, the number of citizens that are not in the labor force, rose to a new record high, increasing by 315,000 to 92.6 million.
• At a rate of 232,000 people finding jobs a month, it would still take six years for the current 17 million Americans who are unemployed or part time employed to find a full time job, assuming hat no one with a job today lost it in the next six years.
• A record 55,553,000 women 16 years and older did not participate in the labor force in September, according to data from the Bureau of Labor Statistics (BLS). This means that 55,553,000 women in the United States did not have a job and did not actively seek one in the past four weeks.

Thus, despite Obama’s claim that the recovery is taking hold years after the recession ended, there are fewer Americans working today, and fewer women, than when Obama took office. That is not a successful Presidency when you look at the numbers.

2) The Heritage Foundation recently had their economic analysts look at the economic numbers also. Salim Furth, Ph.D., researches and explains how public policy affects economic growth as senior policy analyst in macroeconomics at The Heritage Foundation’s Center for Data Analysis. His analysis of the underlying numbers in this economy has found that:

• Median wages are lower than they were when Obama took office and continuing this year despite some growth in the employment numbers.
• Gross domestic product (GDP) is growing but the growth rate number is far less than forecasters expected at the time Obama came into office. 
• The Congressional Budget Office had forecasted that GDP growth would exceed 4% a year from 2011 to 2013. Instead, it struggled to reach even 2%.
• The labor force participation rate among adults between ages 25 and 54 has fallen steadily through the weak Obama recovery, from 82.8% when he took office to 81.1% most recently.
• One reason for the unimpressive employment and economic growth numbers is the reality that all of the new barriers to investment created by this administration and its excessive generation of regulations and laws, every day more businesses are closing their doors than opening them, resulting in a business failure rate is much higher than it used to be.

Mr. Furth’s conclusions: the economy is still very weak and anemic if you look at all of the numbers.

3) James Sherk, also from the Heritage Foundation, finds that while some things in the economy is are improving, there are still major problems in the underling numbers and the realities they represent:

• Despite the drop in the unemployment rate, the government’s payroll survey also reported that average hourly earnings fell $.01 to $24.53 an hour. 
• Over the past year, average hourly earnings have grown just 2 percent–just a half-percentage point faster than inflation. Mr. Sherk concludes that employers apparently see little need to raise real wages to attract employees.
• One of the reasons why the U3 unemployment rate fell below 6% was the reality that, despite 232,000 people finding jobs, 315,000 people dropped out of the search for jobs, artificially lowering the official U3 unemployment rate. 
• The employment-to-population ratio also remained at a flat but low 59.0% rate for the fourth consecutive month, implying that the somewhat improving job growth and unemployment figures in past few months have not translated into an increase in the proportion of Americans with jobs.
• The employment-to-population ratio among 25-54 year olds dropped in September, dropping from 76.8 to 76.7%, showing that the growth in employment rates remains anemic even for Americans in the prime of their working years.

Mr. Sherk’s conclusion: “The labor market has clearly improved this year. But it also remains far weaker than the headline figures suggest. American workers could definitely use a more robust recovery.”

Mix in the following set of numbers on top of the above analyses:

• About 17 million Americans are still unemployed or under employed.
• The number of Americans on government food assistance programs is almost 50% higher than when the recession hit despite years of “economic recovery.”
• The U6 unemployment measure, a more comprehensive and better number for looking at the unemployment picture, is still stuck above 10%, a disgraceful result of a terrible economic recovery. 

The numbers do not lie. The Obama administration and this set of Washington politicians have created and presided over the worst economic recovery in recent history. And they have created these economic numbers despite massive government deficit spending, record low interest rates for a record length of time, and an energy boom.

4) We have often shown how low taxes, low state government debt, and low regulations make for a more vibrant state economy and happier citizens than those states with high taxes, high debt, and high amounts of government regulations. Most recently, we proved these conclusions where we compared so-called “Sinkhole States” with “Sunshine States.”

Paul Bedard, writing for the Washington Examiner on September 30, 2014, looked at another set of numbers to show high taxes, high debt, and high regulation states suffer, along with their citizens, vs., low tax, low debt and low regulation states:

• The Census Bureau recently reported that population growth has shifted to southern states, resulting in the eleven states that make up the Northeast being bled dry of representation in Washington to the tune of 40% fewer members representing those states in Congress since 1950.
• While the states from Pennsylvania to Maine had 141 House members in 1950, they are down to 85 today, a drop of some 40%
• Critics blame rising taxes in northeastern states such as Massachusetts and Connecticut for limiting population growth to just 15% from 1983 to 2013 while the rest of the nation grew more than 41%.
• California and Texas combined have more House Of Representatives than the eleven northeastern states combined.

The American legislative Council concluded: “This result is one of the most dramatic demographic shifts in American history. This migration is shifting the power center of America right before our very eyes. The movement isn’t random or even about weather or resources. Economic freedom is the magnet and states ignore this force at their own peril.” 

In other words, as we have shown many times previously: the numbers prove that low taxes, low debt, low government regulations results in good economic numbers and, in this case, stronger government representation. Maybe if Obama and his economic advisors had looked at these numbers and results, his economic recovery legacy would not be as pathetic as it turned out to be.

Besides the obvious lessons learned today of low taxes, low debt, and minimal government regulations leading to great economic results and numbers, the other important lesson is to not just look at the numbers that the political class want you to see. Step behind the curtain and look for the reality of all the numbers. There you will find the truth of our country’s government and economic health, a truth that politicians usually do not want us to see. More numbers and realities tomorrow.

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