Monday, May 7, 2012

The Real Misery Index

Many people were astonished to see the numbers from the Bureau of Labor statistics that came out Friday, showing that while only 115,000 jobs were created in April, the unemployment rate actually went down a tenth of percent to 8.1%.   In normal periods in American history, the unemployment rate would have either stayed the same or actually increased .1 or .2%.

The reason this unemployment rate is so artificial [and not representative of the actual pain that the American people are suffering] and the reason the rate went down is because so many Americans of working age have left the labor force. While it is true some Americans have left the labor force because of retirement, there are also many Americans who have become so discouraged in being able to find a job, they have stopped looking, and are thus not counted in the unemployment rate.

The people that are in the labor force, those working and those who are looking for work, is measured by the US labor force participation rate. In April, an astonishing 340,000 people stopped looking for work and therefore are not included in the labor force participation rate [the statistics that are used to determine the unemployment rate].

That is why, despite the ever self congratulatory Barack Obama's crowing about the dip in the unemployment rate [of 0.1%], this was not good economic news for the United States of America.  Of course, you have to wonder if Barack Obama actually cares about the economic conditions of Americans, or only about the conditions of his re-election chances.  The fact that so many people have given up looking for a job does not seem to phase "mister cool".  The fact that the unemployment rate went down to 8.1% was great news to him, because this is the only number most people will see [from the main stream media].

On ABC's This Week round table, on Sunday, George Will made this insightful comment. He said under this president, when the unemployment rate goes down, that is actually bad news for the economy [because you know the reason it went down is that so many Americans have given up looking for work].

Trust me, I was no fan of Bill Clinton as president. That being said, I have to admit that president Clinton was good of conveying to the American people that he "felt their pain." President Obama doesn't even give the pretense of feeling Americans pain.  When the economic numbers have been so dismal the last couple of months, instead of feeling our pain, this president wants us to feel his pain, because those numbers hurt his re-election chances.   Poor guy.

The chart  below helps to explain the artificial nature of the unemployment rate under Barack Obama, and the worrisome economic conditions Americans face today.  With the still very high unemployment rate of 8.1%, added to the record low Labor Force Participation Rate of 63.6% [over 88 million Americans not in the labor force], the picture is not as rosy as the Obama administration would have you believe.

For a comparison, when president Bush became president the labor force participation rate was 67.2% and as you can see from the chart, was between 66 and 67% for his 8 years as president.  It shows a drop of about 1% in his 8 years as president. For president Obama, the rate has nose dived in his just over 3 years of president of more than 2%. So, during Obama's 3+ years as president, the US labor force participation rate has doubled the decrease rate that occurred during George W Bush's 8 years.

The misery index adds the unemployment rate with the inflation rate.  I think a truer indication of the misery index would be to add the unemployment rate with the inflation rate with the number of people in the US who have given up looking for work because of the economic conditions. To me, if the percent of people who have given up looking for work was included, that would be a better barometer of the real misery index.

The "What, me worry" president Barack Obama almost makes you long for the days of the "I feel your pain" president Bill Clinton.   For that matter, it makes you long for the days of almost any of the former presidents.  It certainly makes me long for the days of a Mitt Romney presidency.

US Labor Force Participation Rate Chart


bradley said...

The only pain this president feels is that pain knowing he cannot stop even more oil exploration than he has, the pain of knowing there are successful wealthy businessman in this country and the pain of not being able to attend the anti- American anti- white church he went to for so many years!

Big Mike said...

Right on Brad!