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Spinning Unemployment in a Collapsing Empire

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The Bureau of Labor Statistics (BLS) reported Friday that the economy gained only 103,000 new jobs in December -- not enough to keep up with population growth -- but the rate of unemployment (U.3) fell from 9.8% to 9.4%. If you are confused by the report, you are among the many.

In truth, what fell was not the number of unemployed people but the number of unemployed people who are actively looking for work. Those who have become discouraged and have ceased looking for work are not considered to be in the work force and are not counted as unemployed in the U.3 measure. The unemployment rate fell because discouraged workers increased, not because employment rose.

The BLS counts short-term discouraged workers (less than one year) in its U.6 measure of unemployment. That unemployment rate is 16.7%. When statistician John Williams (shadowstats.com) adds the long-term discouraged, the US unemployment rate as of December 2010 was 22.4%.

The question to ask yourself is: why does the media focus on the unemployment measure that does not count any discouraged workers? The answer is that the U.3 measurement only counts 42% of the unemployed and makes the situation appear to be a lot better than it is.

Where are the 103,000 new jobs? As I have reported for years, the jobs are in non-tradable domestic services: waitresses and bartenders, health care and social assistance (primarily ambulatory health care services), and retail and wholesale trade.


Today the United States has only 11,670,000 manufacturing jobs, less than 9% of total jobs. Yet, despite America's heavy dependence on foreign manufactures and foreign creditors, the idiots in Washington think that they are a superpower standing astride the world like a colossus.

John Williams reports that "the level of payroll employment still stands below where it was a decade ago, despite the U.S. population growing by more than 10% in the same period. The structural impairments to U.S. economic activity continue to constrain normal commercial activity, preventing any meaningful recovery in business activity."

Another way of saying this is that American corporations have taken American jobs offshore and given them to the Chinese. So much for big business patriotism.

Williams also reports that, unless it is finagled, next month's BLS benchmark revision of payroll employment data will lower the level of previously reported employment by more than 500,000.

Federal Reserve chairman Ben Bernanke used his testimony before the Senate Budget Committee last Friday to warn that the U.S. government must get its budget deficit under control or "the economic and financial effects would be severe." Here Bernanke is acknowledging that the Federal Reserve cannot indefinitely print money in order to finance wars and bailouts of the mega-rich.

But how is the government to get its budget under control? The U.S. government, regardless of political party or president, is committed to American hegemony over the world. The Congress has just passed the largest military budget in history, and there is no indication that any of America's wars and military occupations are near an end.

The financial crisis is not over, with more foreclosures and more losses for the financial sector that will result in more taxpayer bailouts for those "too big to fail." John Williams says that the double-dip is already happening, just disguised by faulty statistics, and that the deficit implications are horrendous and are likely to result in hyperinflation as the Federal Reserve will have to monetize the otherwise un-financeable deficits.

The dollar is also in danger; its role as reserve currency undermined by the Federal Reserve's creation of more and more dollars. Temporarily, the dollar is buttressed by the grief that Wall Street's sale of fraudulent derivative financial instruments to Europe has caused the euro.

The Republicans will try to destroy Social Security and Medicare in order to pay for wars and bailouts. If Americans are capable of realizing that they are threatened on a much greater level by the Republicans' evisceration of the social safety net than they are by terrorists, the Republican assault on what they call "the welfare state" will fail.

The fallback target will be private pensions, assuming any survive plunder by the Wall Street investment banks. Pension funds could be required to invest in Treasury debt or they could face a levy. In the Clinton administration, Assistant Secretary of the Treasury Alicia Munnell proposed confiscating 15% of all pension assets on the grounds that they had accumulated tax free. Certainly Washington will steal Americans' pensions, just as Washington has stolen Americans' civil liberties, in order to continue the empire's wars of hegemony.

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http://www.paulcraigroberts.org/

Dr. Roberts was Assistant Secretary of the US Treasury for Economic Policy in the Reagan Administration. He was associate editor and columnist with the Wall Street Journal, columnist for Business Week and the Scripps Howard News Service. He is a contributing editor to Gerald Celente's Trends Journal. He has had numerous university appointments. His book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is available here. His latest book,  How America Was Lost, has just been released and can be ordered here.

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I wish there were some specific events or developm... by Lewis Yang on Monday, Jan 10, 2011 at 1:09:05 AM
U.S. NATIONAL DEBT CLOCK The Outstanding Public ... by Mike Preston on Monday, Jan 10, 2011 at 3:43:12 AM
In view of the fact that economic collapse is star... by Marika on Monday, Jan 10, 2011 at 3:49:25 AM
Jobs are low and wages are decreasing yet here in ... by Davey Jones on Monday, Jan 10, 2011 at 8:08:35 AM
I also read that the Los Angeles Airport hires ill... by Odyseus_97 on Monday, Jan 10, 2011 at 10:45:08 AM
That the people who invented 'DHS ' the 'TSA', are... by Davey Jones on Thursday, Jan 13, 2011 at 7:58:43 AM
I think a better clarification of no longer lookin... by Progessive 1 on Monday, Jan 10, 2011 at 8:24:42 AM
That's the best we can do now. Educate others who ... by Elizabeth Hanson on Monday, Jan 10, 2011 at 8:51:57 AM
I believe the price of the social services and pro... by james krilich on Monday, Jan 10, 2011 at 9:15:32 AM
"A car made in Japan is cheaper because it does no... by Yes on Tuesday, Jan 11, 2011 at 11:04:12 PM
The key for US citizens to understand is not unemp... by Alan MacDonald on Monday, Jan 10, 2011 at 12:53:55 PM
If their is a Third World Country out there that ... by greg timmons on Monday, Jan 10, 2011 at 10:16:41 PM
Exports from our Country are out of balance with o... by greg timmons on Monday, Jan 10, 2011 at 2:14:53 PM
Jobs are being offshored because current corporate... by phidipidese on Monday, Jan 10, 2011 at 2:27:45 PM
Another ten to twenty years before losing its supe... by John Little on Monday, Jan 10, 2011 at 5:58:09 PM
Alex Jones interviewed Mr. Roberts a few days back... by Mike Preston on Monday, Jan 10, 2011 at 9:15:26 PM
Not to nit pick, and please don't take it after th... by phidipidese on Monday, Jan 10, 2011 at 10:28:43 PM
can be a real drag.... by Donald on Monday, Jan 10, 2011 at 10:15:50 PM
Thank you Mr. Roberts for another fine article. Th... by Nancy S on Monday, Jan 10, 2011 at 11:05:10 PM