You know, the Iraq War and the various “national security” debacles may be on the forefront of the political debate, particularly with McCain, but there’s something to be said to turning our focus in an economy-type direction. Things are not going particularly well, and it seems as though the dreaded “r-word” is starting to rear its ugly head.
“Based on today’s Employment Report, if we are not in a recession, it is a darned good imitation of one,” said Kevin Giddis, managing director of fixed income at Morgan Keegan. “We are in an unprecedented real estate and credit crisis that is whipping its way through the U.S. economy like a Midwestern tornado.”
Now, there is often chatter about unemployment, saying it’s gone down recently. While true, there’s a little bit of a caveat to toss on there:
The unemployment rate fell because of an increase of 450,000 people whom the government no longer counts as being part of the labor force for a variety of factors, such as that they are not currently looking for work. That drop in the size of the labor force allowed for he modest decline in unemployment, even as the household survey showed 255,000 fewer Americans with jobs than in January.
To put it simply, if there are 100 people and 95 have jobs, the unemployment rate is 5%, right? Well let’s say another two people lose their job, you’d think it’d be 7% now. Ah, but three of those people “don’t count”, so now it’s 4 out of 97 that have no jobs, meaning an unemployment rate of 4.1%. A little mathemagic and unemployment goes down, see how that works?
That’s how you know something’s terribly wrong with how our government agencies tally these things. 255,000 fewer jobs, unemployment drops.
