Global Economic Crisis

If any further proof is needed that the U.S. economy is headed towards a double dip recession, the latest statistics from the Labor Department provide it. The most recent figures, just released, show that initial jobless claims have risen to 500,000. This is the third consecutive week of rising unemployment claims, and the worst numbers in nine months.

In March 2008, initial jobless claims rose to a peak of 651,000. By July 2010 they had dropped to 427,000. The green shoots corner over at the Federal Reserve and U.S. Treasury were celebrating the “success” of the Obama stimulus spending, and expected the figures on initial unemployment claims to soon drop below 400,000, a sign that the job market in America was recovering. Instead, however, this figure has soared to 500,000. The reason is simple. There has been no recovery or end to the economic crisis. All that has been accomplished is that Wall Street was bailed out, at the cost of transferring vast amounts of debt from the private to the public sector.

And what are the august politicians of Washington DC doing while the U.S. economy continues its implosion? Surely they must be working night and day trying to salvage the fast eroding American economy. Perhaps they would, if they had not found other fish to fry. For instead of addressing the nation’s profound economic crisis, they are obsessed over the proposed location of a new Islamic Center in Lower Manhattan  and whether or not it should be moved a few blocks, as well as the vital existential question of President Barack Obama’s religious identity (some on Capital Hill feel he is not really a Christian, and might actually be a secret Moslem).

It would appear that the American political establishment has gone deeply insane, and its collective madness will accomplish nothing constructive on behalf of the U.S. economy.

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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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