The economy is in the tank, and no amount of chest pounding by Barack Obama can change that fact.
The unemployment figures released on Friday were as confusing as they were dreadful.
The New York Times (hardly the official mouthpiece of the Tea Party Movement) headlined the numbers:
US Lost 131,000 Jobs as Governments Cut Back
While, Bloomberg's head was:
US Companies Add 71,000 Jobs
Both headlines were correct.
The reason for the big lost among government workers was largely the end of the census-taking process. According to the Times:
Private employers added 71,000 jobs last month, but those figures were overtaken by the 143,000 cut as the Census wound down.
According to the article by Motoko Rich, the economy has to add about 140,000 jobs every month just to absorb new workers being added because of population growth. That means the 71,000 jobs added in July didn't even match that, much less make a dent in the millions of Americans who are looking for a job.
Add to that, the Obama Labor Department admitted that the numbers they had released for June were wrong. (alright, they "revised" the figures downward, but still …)
The Labor Department greatly revised its headline number for June, widening the job loss figure for that month to 221,000 jobs, from 125,000. Private sector hiring in June, originally reported at 83,000, was lowered to 31,000.
The crack Department of Labor missed by 96,000 jobs; an error of nearly 77 percent. Imagine the screaming and rending of flesh by the main stream media if the Bush Administration had been overly optimistic in an employment report to the tune of 96,000 jobs.
Nevertheless, the unemployment rate is stuck at 9.5 percent which is due to the number of people who have simply dropped out of the labor force and quit looking for a job. According to Phil Izzo of the Wall Street Journal: The 9.5% unemployment rate is calculated based on people who are without jobs, who are available to work and who have actively sought work in the prior four weeks. The "actively looking for work" definition is fairly broad, including people who contacted an employer, employment agency, job center or friends; sent out resumes or filled out applications; or answered or placed ads, among other things.
The broader measure of unemployment (known as the U-6 rate) "accounts for people who have stopped looking for work [but indicate they want a job] or who can't find full-time jobs."
No matter how it is defined, the unemployment in the U.S. rate has been above nine percent for so long, it has become - like $3.00 gasoline - the "new normal."
From the NY Times over the weekend,
Nearly half the 14.6 million unemployed have been out of work for more than six months, a level not seen since the Depression.
As you are all-too aware, I am not an economist. But, I know this: One of the reasons corporate profits have risen in the face of high unemployment is because too many companies got too fat with too many people doing too little work and they realized they could get just as much done with far few people.
The Assistant to the Assistant's Assistant who got laid off earlier this year, ain't gettin' that job back. In fact, the Assistant to the Assistant ought to be polishing up the old resume because if consumers continue to limit their purchases to things they need, rather than things they want, then those corporate profits are going to shrink along with the inventories on box-store shelves and more layoffs will be coming.
Last night the Financial Times' analyzed what the Federal Reserve might do based on the unemployment report:
That followed news a week earlier that growth in US gross domestic product slowed from an annualized rate of 3.7 per cent in the first quarter to 2.4 per cent in the second quarter.
That means, according to the FT, the Fed is going to have to deal with "weak economic data and rising fears of a double-dip recession."
Rule A: If you have a job, you'd better do everything you can to keep it. Rule B: If you are looking for a job, you'd better plan on taking the first one that comes along and then see Rule A.
A double dip recession may well be bearing down upon us. If that happens it will not be the Democrats' problem nor the Republican's problem. It will be America's problem and we're going to have to start acting like grown-ups to find a solution.
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