Jobs Recovery is Still Counterfeit

The seasonally adjusted employment figure released by the Bureau of Labor Statistics for the month of April 2012 for the household survey data shows a loss of 169,000 jobs compared to March 2012!  Yet this was reported as a less than expected seasonally adjusted increase of 115,000 jobs by the Saturday/Sunday Wall Street Journal of 5-6 May 2012 which took its numbers from the establishment survey that covers a narrower range of jobs and under-counts the self-employed and very small businesses.  In comparison, the household survey with no seasonal adjustment showed a large increase in jobs of 583,000 jobs!

Let us compare the numbers of the unemployed according to the BLS.  According to the seasonally adjusted household survey, there are 12,500,000 unemployed.  Without the seasonal adjustment there are only 11,910,000 unemployed, or fewer unemployed by 590,000.  So given that I will henceforth in this post be discussing the household data without any seasonal adjustment, one would expect that there might actually be much evidence of a jobs recovery due to the 583,000 new jobs in April compared to March.  Let us see.  The numbers are given in the table below, in which I also calculate the number of missing jobs based on the percentage of the non-institutional working age population in the workforce in January 2000, when good jobs were plentiful.  Note that unemployment is at its annual highest in January of each year, so this is a very relaxed standard of the workforce participation in that respect.

The working age population grew by 180,000 people.  The number employed increased by 583,000 as noted above and the number of unemployed fell by 994,000 people.  Since some of the 180,000 who reached employment age minus those who left due to death took some of the 583,000 jobs, at least 411,000 people had been unemployed so long that they died!  Oh, well maybe they just became discouraged and left the workforce.  Thanks to the many newly employed and the many who left the workforce in despair of ever finding a job, the standard, but relatively meaningless, unemployment rate fell greatly from 8.36% in March to 7.74% in April.  This rate is far below the seasonally adjusted rate of 8.1% commonly discussed in the media.  Let us see what happens to the number of missing jobs.

Now since this is not seasonally adjusted data, we have to maintain a long view of it.  So, let us compare the number of missing jobs in April 2012 to the number missing in April 2011 and April 2010.  There is an increase of 121,000 missing jobs compared with one year earlier.  Even over the two years of supposed recovery since April 2010, there is a decrease in the number of missing jobs of only 11,000!  Going back to the table above, note that the missing jobs in April 2012 imply a real unemployment rate of 13.34%, which is very slightly lower than the 13.47% unemployment rate of a year earlier and higher than that of April 2010, which was 13.03%.  Month after month my comparison of these missing jobs numbers to figures a year ago and two years ago, show no improvement in the real unemployment rate.  Basically, the economy is just employing enough additional people to tread water against population growth, but not recovering the jobs lost in the Great Socialist Recession.

In the first quarter, the nominal GDP growth rate was 3.8%, which sounds decent, but was not.  It is not the nominal growth rate that matters.  We need to know the real GDP growth rate.  The government tells us this is 2.2% after subtracting a consumer price index rate of 1.54% from the nominal GDP growth rate.  There is a problem here.  The core consumer price index rate over the last 12 months, which excludes food and energy, is 2.3%.  If one subtracts this from the nominal GDP growth rate of 3.8%, one gets a growth rate of 1.5%.  But, the all items CPI rate over the last 12 months was 2.7%.  Subtracting that rate from the nominal GDP rate leaves a mere 1.1% growth of GDP.  Now, since the population is growing at a rate of 1.0% a year, real per capita GDP does not increase unless real GDP is greater than 1%.  So the first quarter of 2012 real per capita GDP grew by about 0.1%.  This means that our standard of living is not improving.

Normal real growth rates in a recovery to a recession are actually higher than long term real growth rates.  In the present case, the real GDP is falling ever further behind the normal real GDP growth rate.  We are experiencing our fourth year of decreasing or stagnant standard of living.  No wonder the jobs creation problem is lingering forward, ever forward under the anti-business, especially anti-small business, regime of Obama.  There is no real growth in the economy.  We are simply in another government induced bubble.  This one is clearly one of a flood of printed money.  That counterfeit money is creating a counterfeit recovery.

This stagnant standard of living condition is what Obama was aiming for when he decided that energy costs should skyrocket, workers should be forced into labor unions and forced to buy expensive federally mandated health insurance, that a pristine environment was always more important than the standard of living of man, and that central planners should control the financial industry, the medical industry, the insurance industry, and the auto industry.  This is the transformation of American which also seeks to soak the rich and the productive.  This is Forward, Forward right back to the stagnation of medieval times, which Obama views as so compatible with his environmentalist vision and his belief that man is a catastrophe for the Earth's climate and its resources.  Of course, that time was also very compatible for those who would be king, the cement scratching ambition of the young Obama.