Aug. 11, 2014

Do you remember when real reporters existed? Those were the days before the Clinton regime concentrated the media into a few hands and turned the media into a Ministry of Propaganda, a tool of Big Brother. The false reality in which Americans live extends into economic life. Last Friday’s employment report was a continuation of a long string of bad news spun into good news. The media repeats two numbers as if they mean something—the monthly payroll jobs gains and the unemployment rate—and ignores the numbers that show the continuing multi-year decline in employment opportunities while the economy is allegedly recovering.

The so-called recovery is based on the U.3 measure of the unemployment rate. This measure does not include any unemployed person who has become discouraged from the inability to find a job and has not looked for a job in four weeks. The U.3 measure of unemployment only includes the still hopeful who think they will find a job.

The government has a second official measure of unemployment, U.6. This measure, seldom reported, includes among the unemployed those who have been discouraged for less than one year. This official measure is double the 5.3% U.3 measure. What does it mean that the unemployment rate is over 10% after six years of alleged economic recovery?

In 1994 the Clinton regime stopped counting long-term discouraged workers as unemployed. Clinton wanted his economy to look better than Reagan’s, so he ceased counting the long-term discouraged workers that were part of Reagan’s unemployment rate. John Williams (shadowstats.com) continues to measure the long-term discouraged with the official methodology of that time, and when these unemployed are included, the US rate of unemployment as of July 2015 is 23%, several times higher than during the recession with which Fed chairman Paul Volcker greeted the Reagan presidency.

An unemployment rate of 23% gives economic recovery a new meaning. It has been eighty-five years since the Great Depression, and the US economy is in economic recovery with an unemployment rate close to that of the Great Depression.

The labor force participation rate has declined over the “recovery” that allegedly began in June 2009 and continues today. This is highly unusual. Normally, as an economy recovers jobs rebound, and people flock into the labor force. Based on what he was told by his economic advisors, President Obama attributed the decline in the participation rate to baby boomers taking retirement. In actual fact, over the so-called recovery, job growth has been primarily among those 55 years of age and older. For example, all of the July payroll jobs gains were accounted for by those 55 and older. Those Americans of prime working age (25 to 54 years old) lost 131,000 jobs in July.

Over the previous year (July 2014 — July 2015), those in the age group 55 and older gained 1,554,000 jobs. Youth, 16-18 and 20-24, lost 887,000 and 489,000 jobs.

Today there are 4,000,000 fewer jobs for Americans aged 25 to 54 than in December 2007. From 2009 to 2013, Americans in this age group were down 6,000,000 jobs. Those years of alleged economic recovery apparently bypassed Americans of prime working age.

As of July 2015, the US has 27,265,000 people with part-time jobs, of whom 6,300,000 or 23% are working part-time because they cannot find full time jobs. There are 7,124,000 Americans who hold multiple part-time jobs in order to make ends meet, an increase of 337,000 from a year ago.

The young cannot form households on the basis of part-time jobs, but retirees take these jobs in order to provide the missing income on their savings from the Federal Reserve’s zero interest rate policy, which is keyed toward supporting the balance sheets of a handful of giant banks, whose executives control the US Treasury and Federal Reserve. With so many manufacturing and tradable professional skill jobs, such as software engineering, offshored to China and India, professional careers are disappearing in the US.

The most lucrative jobs in America involve running Wall Street scams, lobbying for private interest groups, for which former members of the House, Senate, and executive branch are preferred, and producing schemes for the enrichment of think-tank donors, which, masquerading as public policy, can become law.

The claimed payroll jobs for July are in the usual categories familiar to us month after month year after year. They are domestic service jobs—waitresses and bartenders, retail clerks, transportation, warehousing, finance and insurance, health care and social assistance. Nothing to export in order to pay for massive imports. With scant growth in real median family incomes, as savings are drawn down and credit used up, even the sales part of the economy will falter.

Clearly, this is not an economy that has a future.

But you would never know that from listening to the financial media or reading the New York Times business section or the Wall Street Journal.

When I was a Wall Street Journal editor, the deplorable condition of the US economy would have been front page news.

UPDATE: See Pam & Russ Martens:http://wallstreetonparade.com/2015/08/how-u-s-achieves-a-5-3-unemployment-rate-if-you-earn-no-money-you-can-still-be-counted-as-employed/

How U.S. Achieves a 5.3% Unemployment Rate: If You Earn No Money, You Can Still Be Counted as Employed

By Pam and Russ Martens: August 10, 2015 

Gallup CEO, Jim Clifton, Worries Aloud on CNBC That He Might Disappear for Criticizing the Government’s Job Numbers (February 4, 2015)

Last Friday’s nonfarm payrolls report of 215,000 new jobs in July with its attendant announcement of an unemployment rate of 5.3 percent drew mostly yawns from the media. That wasn’t the case on February 3 of this year when Jim Clifton, CEO of the polling company, Gallup, wrote a stunning opinion piece on the company’s web site calling the U.S. unemployment rate “The Big Lie.” Clifton raised more media frenzy the next day when he appeared on CNBC and suggested he might “disappear” for questioning the government’s unemployment rate.

Back then, the official unemployment rate was 5.6 percent. Today it’s 5.3 percent – a very healthy looking rate for an economy that is supposedly on the rebound.

One of the bogus aspects raised by Clifton in his opinion piece about how the U.S. government calculates the unemployment rate was this:

“Say you’re an out-of-work engineer or healthcare worker or construction worker or retail manager: If you perform a minimum of one hour of work in a week and are paid at least $20 — maybe someone pays you to mow their lawn — you’re not officially counted as unemployed in the much-reported 5.6%.”

Even for a government hell bent on putting the best possible spin on overcoming the Wall Street train wreck of 2008, which brought on the worst economic slump since the Great Depression, characterizing someone working one hour a week in a lawn job as “employed” seems like the height of duplicity. We decided to check it out.

We went directly to the source: the Bureau of Labor Statistics (BLS), the Federal agency that calculates who is employed and who is not. According to the BLS, the bogus nature of who is counted as “employed,” is even worse than Clifton suggests. Not only is a person counted as employed if they are working one hour a week in a lawn job paying $20, but a worker who makes no money at all donating his or her services to a family business for 15 hours or more per week is also considered employed.

Throughout the rest of America, one’s donation of services typically defines one as a volunteer not an employed worker; but the BLS doesn’t see it that way.

From the Bureau of Labor Statistics web site:

“People are considered employed if they did any work at all for pay or profit during the survey reference week…

“Garrett is 16 years old, and he has no job from which he receives any pay or profit. However, Garrett does help with the regular chores around his parents’ farm and spends about 20 hours each week doing so.

“Lisa spends most of her time taking care of her home and children, but she helps in her husband’s computer software business all day Friday and Saturday.

“Both Garrett and Lisa are considered employed. They fall into a group called unpaid family workers, which includes any person who worked without pay for 15 hours or more per week in a business or farm operated by a family member with whom they live. Unpaid family workers comprise a small proportion of total employment. Most of the employed are either wage and salary workers (paid employees) or self-employed (working in their own business, profession, or farm).”

The tricked up unemployment rate helps explain why the labor force participation rate is at a 38-year low of 62.6 percent. According to the BLS, July 2015 data show 93,770,000 individuals not in the labor force. That compares with 90,451,000 not in the labor force in July 2014. How can the economy and unemployment situation be improving when droves of workers are dropping out of the labor pool? Blaming the anomaly on retiring baby boomers does not explain what is happening to working age men and women.

In July 2014, there were 35.5 million men aged 16 and older not in the labor force. Today, that figure stands at 37.5 million not in the labor force, an increase of exactly 2 million men of working age. For women aged 16 and older, in the same span of time, their nonparticipation in the labor force has grown from 54.9 million individuals to 56.2 million.

The dismal labor force participation statistics are completely consistent with a tepid economy that can’t get out of the mire of 2 percent annual GDP growth, negligible wage growth, extended periods of unemployment (28 weeks versus the typical 16 weeks in the two decades prior to the 2008 crash), sluggish consumer demand, collapsing commodity prices and persistent warnings of the threat of global deflation.

The cold reality of the actual employment numbers is being molded and massaged daily by corporate media headlines pronouncing strong employment growth. Consider this morning’s headline at a Bloomberg Business interview with Stanley Fischer, Vice Chairman of the Federal Reserve: “U.S. Near Full Employment.”

http://www.paulcraigroberts.org/2015/08/10/us-economy-continues-collapse-paul-craig-roberts/