Joblessness in Obama Nation: U-6, participation rate dismal

Economists, pundits, ruling class continue to ignore key economic data point. Photo: St. Louis Fed

WASHINGTON, October 22, 2013 – According to the government’s latest data from the U.S. Bureau of Labor Statistics, the U.S. economy added 148,000 nonfarm jobs in September vs. an estimated and expected 180,000, after a revised figure of 193,000 in August which followed a downwardly revised and depressing 89,000 for July. The current monthly figures enabled the government to tout a “drop” in the jobless rate to 7.2 percent from 7.3 percent. But watch for this number, too, to be revised downward in a future report.

Unfortunately for business planning purposes, these jobless percentages continue to be wildly self-serving and misleading because the do not differentiate between full- and part-time (less than 40 hours per week) employment nor do they take into account the large numbers of underemployed individuals or the mass of long-term unemployed workers who have lost unemployment benefits and are therefore no longer counted as unemployed.

Both the media and the government continue to ignore the government’s own more reliable U-6 unemployment figures, a broader measure that does take these extended and critical criteria. 

Labor participation rate is now the lowest number since the brief but severe post-1974-1976 recession. (Federal government, St. Louis Federal Reserve chart)

While that number, too, fell 0.1 percent in September, from 13.7 to 13.6 percent, this is roughly double the “official” rate, clearly an indication that middle class and working class Americans continue to endure what has become for them the Great Depression II. This is an inconvenient truth the ruling class either cannot fathom or chooses to ignore as it continues with policies that do nothing to alleviate the problem.

Bearing this out, the U.S. labor force participation rate remained unchanged over the same period, firmly remaining at 63.2 percent, a horrendous rate that is the worst reading for this measure since August 1978, not long after the U.S. had begun a feeble recovery from the short but vicious post-Arab Oil Embargo, post-Vietnam, post-Nixon Recession of 1974-1976. (See chart in header above, and adjacent to this text. Click adjacent chart to enlarge.)


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But bad news is good

While the statistics remain, gloomy, however, for the average American worker, they remain a cause of great joy on Wall Street. Having halted for now its intention to taper its QE3 bond-buying program, the Federal Reserve will likely continue to postpone that action which it abandoned for all intents and purposes in September when it correctly foresaw the negative effects of Washington’s ongoing budget charade which is likely to continue into 2014.

The Wall Street punditocracy now predicts tapering will be back on the table by the end of 2014’s first fiscal quarter. But with the dovish Janet Yellen virtually certain to become the next Fed Chair, and with additional dovish Fed appointments in the offing, we think any notion of slowing the bond-buying program could be premature until 2015 at the earliest.

Savvy Obama Administration officials along with more devious elements in the Democrat-controlled Senate know full well that the Fed’s printing presses continue to spare them from making the hard political decisions on budgets and entitlements that could cost them their jobs in the 2014 midterm elections. They’ll do everything they can to encourage a Yellen-led Fed to continue the status quo as long as possible.


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It’s likely, therefore, that the phony unemployment percentages being publicly reported, will continue to trend down gradually, but will not touch the magic 6.5 percent, easy-money-ending number until after next November’s elections.

What this means for the market longer term is as yet unclear. But what it may mean for now is that an impending Santa Claus year-end rally may be entering its early stages either right now or by early November.

For our latest market prognostications, check out our companion column, today’s edition of Market Maven.

  —AP contributed to this report

Read more of Terry’s news and reviews at Curtain Up! in the Entertain Us neighborhood of the Washington Times Communities. For Terry’s investing and political insights, visit his Communities columns, The Prudent Man and Morning Market Maven, in Business.

 


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Terry Ponick

Now writing on investing, politics, music, movies and theater for the Washington Times Communities, Terry was formerly the longtime music and culture critic for the Washington Times print edition (1994-2009) before moving online with Communities in 2010.  

 

 

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