Everyone reading this knows I’m not a fan of Donald Trump. But he got something right and even MSM has to admit it. I’m not talking about election fraud (which everyone is pretending didn’t happen in the Clinton Vs Sanders dustup). This is fundamental to the case Hillary Clinton is making for a ‘third Obama term’.If unemployment is in fact far worse than it was in early 2007, we really aren’t ‘back’ from the Bush Crash of 2008. And as reportage is getting tough, there’s going to be a barrage of truthfulness about unemployment. Newsweek lays out the case here. They start by stating the purported facts: Last week, the Obama administration’s Bureau of Labor Statistics (BLS) reported that the economy added 255,000 jobs in July, and that the official unemployment rate had remained at 4.9 percent—the lowest it has been since early 2008. In a speech to the Detroit Economic Club, Trump derided the report, calling it “one of the biggest hoaxes in modern politics.”
Then Newsweek offers the opinions of other experts: Others such as private equity executive Leo Hindery argue that even that figure (6.2%)grossly understates unemployment in America. In his latest dispatch, Hindery points out that there are 2 million so-called “marginally attached workers,” which BLS defines as those who “were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months.” There were also another 5.9 million “part time of necessity” workers—those he says are “unable to find full-time jobs or who’ve had their hours cut back.” If those workers were counted, the official unemployment rate would be 9.7 percent, as BLS itself acknowledges. Add another 4.3 million who say they want work but haven’t sought employment, and Hindery says the real unemployment rate in America is 12.1 percent”.(my boldface).
much of our ‘new jobs’ bromide rests on something called the Birth/Death model. I’ve written about this before, and it’s comforting to know that I’m not the only one who sees the current unemployment rate as fiction. Paul Craig Roberts has been railing against the current gaming of the BLS employment model, which includes a fiction called the ‘birth-death model’. He explains here in a debunking of the December 2015 jobs report:
What is wrong with these numbers? Just about everything. First of all, 145,000 of the jobs, or 54%, are jobs arbitrarily added to the number by the birth-death model. The birth-death model provides an estimate of the net amount of unreported jobs lost to business closings and the unreported jobs created by new business openings. The model is based on a normally functioning economy unlike the one of the past seven years and thus overestimates the number of jobs from new business and underestimates the losses from closures. If we eliminate the birth-death model’s contribution, new jobs were 126,000.
As I reported last year, Jim Clifton, CEO of the Gallup report company, excoriated the lies around our ‘recovering’ economy last year when someone finally noticed that we were at 93 million able-bodied adults not participating in the workforce. Clifton noted that business failures are outnumbering business startups for the first time since the 1930’s. Much of our ’employment’ has been statistical adjustment. David Stockman also lays out the gaming of the Birth-Death model here. If you believe Stockman, some 66% of the ‘new jobs’ since 2009 are statistical adjustments based on birth/death model.
James Howard Kunstler also called out the fakery, noting that an economy stuck at 1.2% growth rate doesn’t have 225K of new jobs just showing up.His quote There’s a new feature to the Anything-Goes-and-Nothing-Matters economy: Nothing-Adds-Up.
Why does this matter? Why should anyone care about the total gaming of the unemployment, inflation and GDP rates?
Because elections have consequences. And of the two finalists in the ugliest presidential race in fifty plus years, only one of the candidates is willing to say that the economy is in the crapper. Donald Trump has had an awful few weeks among the chattering classes and has said some things that should have never made it out of his pie-hole. But the ONE THING his backers know is that Trump is willing to tell the truth on what is the worst economy since the New Deal. We’re now in the season when the MSM will go after both candidates with a fervor we should have seen in the primaries. And yes, Trump dissembles. But he’s right about the bread and butter issues of the economy, and he’s willing to talk about how f*cked we are. Is that enough to get him elected?