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5.1 is Good News

By       Message Seymour Patterson       (Page 1 of 1 pages)     Permalink

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In some quarters, good news for the American economy is greeted with dread. It is understandable that a wobbly stock market might be perceived with foreboding. The damage could be incalculable to thousands of individual and institutional investors with money in Wall Street. The slowdown of the Chinese economy should be a real concern to all. Similarly, the disintegration of the Middle East like the grave Syrian internecine issue justifies alarm. But like the Iran deal that might be viewed as an alternative to war, economic good news is being greeted with skepticism. That is why it is perhaps not at all surprising that the reported drop in the unemployment rate to 5.1 percent brings out charges of fakery and discouraged workers leaving the labor force. These reactions are intended to cast aspersion on the numbers for political reasons. The dearth of statesmanship in politics continues unmitigated. The wise men in the financial market believe the job's report is weak and that it might frustrate the Fed's attempts to increase interest rates. (See Reuters) This is, however, a different concern from that voiced by politicians and policymakers. True, the job numbers are not over the 200,000 benchmark figure: a number south of this might be considered a weak showing. The important thing though is upward trend in employment, and cumulative month after month of workers finding work that matters. It is also important that wages are finally rising, including the minimum wage in many states. This could bode well for economic growth going forward by increasing aggregate demand. The trillions hoarded by businesses in a growth environment might be unleashed on the economy as new investment.

Despite naysayer politicians, 5.1 percent unemployment is a big deal no matter how you slice it: 173,000 new jobs were added to the U.S. economy in August. The good-news detractors prefer to focus on discouraged workers exiting the labor force: the number of discouraged workers was 624 thousand in August. Not much can be done about people who give up looking for work because they have been unable to find work. But sometimes their failure are rooted elsewhere: discrimination based on lack of training, age (too young or too old), school or family responsibilities, ill-health or transportation problems, etc. (See Bureau of Labor Statistics) The 'etc.' might include people retiring and advances in technology that increase productivity and otherwise render some workers redundant.

When the unemployment rate was rising post stimulus, Speaker Boehner could be seen on TV lamenting: "Where are the jobs?" You got the impression he wasn't really interested in the economy generating more job--it was shedding 600,000 to 800,000 a month in 2009. Rather Boehner's goal was to make the President look bad. Further, when the unemployment rate started to edge down, Jack Welch famously tweeted: "Unbelievable jobs numbers...these Chicago guys will do anything"can't debate so change numbers." Lurking behind the tweet was a sentiment echoed by others: the administration was cooking (i.e. manipulating) the labor figures or changing the way the Bureau of Labor Statistics was coming up with the numbers. Specifically, "Levin says this game the Obama administration is playing with the unemployment numbers, removing 1.2 million people out of the workforce in order to get unemployment lower, reminds him of the propaganda used in the old Soviet Union, where they would lie about record high wheat production levels while people were starving to death." (See The Right Scoop) These charges are often made without any shred of evidence, and repetition . . . the act of repeating something without merit often is enough make people come to believe them.

In some political circles, if an assertion does not pan out--no problem--just move on to another pseudo crisis. Hurl condemnations at your political opponent if the economy is not growing and adding jobs. However, when it is growing and adding jobs switch gears and condemn it for not growing fast enough. This isn't a new tactic: global warming was denounced as a hoax. If there is irrefutable empirical scientific evidence of warming, switch gears and assert that climate change is not manmade. When presented with data showing that under the Bush administration, Iran's centrifuges went from zero to more than 5,000, instead of acknowledging culpability of the administration he served, Mr. Cheney proceeded to say, "I don't see it that way." He even stated that the centrifuges build-up happened under President Obama, which as it turned out was false--and we know this because Wallace said, "By 2009, they were 5,000."--the year of Pres. Obama's first inauguration. (See Crooks & Liars)

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If Mr. Mitt Romnie had become president of the U.S., these anticipated jobs numbers--there was an expectation employment would continue to improve. But he would have been given credit for the jobs performance based on Mr. Romnie's superior management skills. And there would of course been the inevitable comparison with the previous administration, which had come to the office with a less stellar management resume. There were questions about whether Mr. Obama was up to the task given the magnitude of the economic problems handed him. For instance, when Bush and Cheney came to the White House (January 1, 2001) the U.S. unemployment rate was 4.2 percent. When he left office (upon Obama's arrival, January 1, 2009) the unemployment rate had reached 7.8 percent. The August 2015 unemployment rate is 5.1 percent. (From ourfuture.org) However, the numbers speak for themselves: the unemployment numbers have been in a steady downward trajectory from about 10 percent to near 5 percent. This has been an achievement in the light of concerted efforts by members of Congress to do everything in their power to repel all efforts by the administration to promote faster economic growth: remember sequestration . . . government shutdown . . . tax cuts for the rich . . . cuts in government spending. In a sane political landscape, peopled with statesmen in our politics, unity of purpose for the overall good would be celebrated--including good jobs news.

 

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Seymour Patterson received a Ph.D. in economics from the University of Oklahoma in 1980. He has taught courses and done research in international economics and economic development. He has been the recipient of two Fulbright awards--the first in (more...)
 

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