Global Economic Crisis

In the bizarre world of quantum mechanics, there is a specific sub-atomic particle that can mathematically be in two places simultaneously. In the even more bizarre world inhabited by the U.S. Bureau of Labor Statistics, it is possible for the American economy to still lose jobs while at the same time the unemployment rate declines. American ingenuity strikes again!

The BLS’s recent report on U.S. unemployment statistics revealed that officially, the American economy lost 20,000 jobs in January. Considering that most economists predicted a small gain in jobs, this is obviously a worse than expected result. Yet, despite the jobs losses, the BLS is also reporting that the official U.S. unemployment rate dropped from 10%  to “only” 9.7%. How did the creative minds at BLS shrink the unemployment rate even though fewer Americans were working in January in comparison with December? Through cunning statistical manipulation. Apparently, someone decided on high that it was not politically expedient to maintain an official U.S. jobless rate in double digits, so despite the continuing job losses, a way was found to report a reduction in the unemployment rate.

What is even more remarkable about this BLS imbroglio is the reaction of mainstream American media. Virtually every significant news source in the United States is heralding the BLS manufactured “drop” in the rate of unemployment as a signpost on the road to economic recovery, and a first rate achievement, demonstrating true progress towards resolving America’s unemployment catastrophe. It seems that there is a collective will in America to drink the Kool-Aid of wishful thinking. One gets the impression that the Democratic Party has borrowed the old faith-based ideology from the Republicans, maintaining that belief that things are indeed getting better will somehow transform celestial thinking into terrestrial reality.

Hidden amidst the opacity of BLS statistics was the admission that the U.S. government had vastly undercounted the number of job losses in 2009, supposedly by more than 600,000. This stunning admission reveals the unreliability of the Bureau of Labor Statistics to accurately gauge jobs destruction in the United States brought on  by the global financial and economic crisis. What we have in lieu of statistical objectivity is PR spin and metaphysical interpretations.

With contradictory statistics pouring out of the BLS, undermining the efficacy of any official analysis of America’s dim employment reality, I offer a more useful gauge of what is actually transpiring. With 70% of America’s economic output derived from consumption, what is actually happening to the financial capacity of American consumers to actively participate in the American economy?  Taking into account  not only high unemployment, but replacement jobs that are part-time or compensated at lower salaries, it is clear that the collective income of American consumers continues to deteriorate. Anecdotal evidence based on plummeting federal and state tax revenues are a clear marker of this calamitous decline in the purchasing power of American consumers.  Unfortunately, not even the creative statisticians and alchemists at the Bureau of Labor Statistics can spin this dim reality into positive signs that America’s economic renaissance is just around the corner.

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The U.S. Labor Department came out with the latest official jobless figures, showing that unemployment has now reached double digit territory: 10.2%. However, shortly after  this grim milestone was revealed, The New York Times had a front page headline that proclaimed the actual unemployment rate was 17.5%, meaning one in six American workers was either unemployed or forced to take a lower-paying part-time job due to the unavailability of a suitable fulltime position.

Since 1961, the Bureau of Labor Statistics has excluded discouraged workers from the official unemployment count, disseminated as U3. The more inclusive U6 unemployment figure, published in The New York Times, stands at 17.5%. However, there are other estimates that indicate true unemployment in the United States stands in excess of 20%.

More important than the competing unemployment figures in the change in  total labor income, equivalent to the gross number of hours worked multiplied by the mean average hourly wage. Over the past year, hours worked in the United States has declined by 7%, simultaneously with wages being frozen or reduced. In an economy dependent on the American consumer for more than 70% of GDP, these statistics do not augur well for a sustained economic recovery in the U.S., despite the official boasting of “green shoots” on the horizon.

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