Free Markets, Free People


Jobs, Unemployment And “A Deficit Of Trust”

Yesterday we were told the nation’s employers “unexpectedly” shed more jobs last month than forecast.  Today we’re told that despite that, the unemployment rate “surprisingly” decreased to 9.7%.

Unsurprisingly I don’t believe a word of it.  Call me a cynic, call me a skeptic, but I just don’t believe much of anything coming out of the government these days (I know, let’s call it a “deficit of trust”).  Don’t forget that 9.7% number comes on the heels of a report saying the government forgot to count over 800,000 lost jobs last year.

When the government releases Friday’s unemployment report, nearly a million jobs could be erased. The change won’t show up in the monthly report. Rather, the expected job will show up in the government’s revised job losses from April 2008 to March 2009, showing the labor market was in much worse shape than we knew at the time.

So here we are, rampant and exceedingly high unemployment, no relief in sight and the unicorns and rainbows crowd are spinning the numbers and telling us all is well and getting better.

Well, economic well-being, like is said of politics, is all local.  And for the most part, the locals aren’t buying the spin.  Here’s the brutal truth:

An unemployment rate that’s projected to average 10 percent this year will likely weigh on consumer spending, preventing the biggest part of the economy from accelerating. Without additional gains in sales, companies will be forced to keep cutting costs, limiting staff in order to boost profits.

“Businesses are simply postponing their hiring for as long as possible,” Richard DeKaser, chief economist at Woodley Park Research in Washington, said before the report. “The willingness to hire is not there.”

Fewer customers, less spending. Less spending, less of a need to make things.  Less demand for products means less demand for more employees.

Key line: “Without additional gains in sales, companies will be forced to keep cutting costs, limiting staff in order to boost profits.”

And that’s precisely what they’re doing.  The Labor Department reports:

Nonfarm business sector labor productivity increased at a 6.2 percent annual rate during the fourth quarter of 2009, the U.S. Bureau of Labor Statistics reported today. This gain in productivity reflects increases of 7.2 percent in output and 1.0 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) This was the first quarterly increase in hours worked since the second quarter of 2007 (0.9 percent). Productivity increased 5.1 percent over the last four quarters –more than during any similar period since output per hour rose 6.1 percent from the first quarter of 2001 to the first quarter of 2002.

Even the Riddler could puzzle this one out.  Worker productivity has increased 5.1% over the last four quarters.  But unemployment has continued to grow.  What does that mean?  Well it means companies and businesses have found a way to increase production with fewer employees.  And that, as the key line above suggests, boosts profits.

Now that productivity increase can come in many ways.  Simply distributing the same (or even increased) work load to fewer employees.  That’s happening all over the place now.  Then, in certain industries,  automation replaces employees (it doesn’t require health insurance, vacation days, a 401k and isn’t represented by a union).  And in some places it’s a combination of both plus modified business models. 

The bottom line is there’s not likely to be that much hiring if and when the economy actually turns around unless a huge increase in demand is realized.   And even then, employers are likely to try to hold out as long as possible, given their productivity gains, until those productivity gains are neutralized.  I’m sure there’s a tremendous gap between now and that point.  Then add in the market instability brought on by pending legislation like health care reform and cap-and-trade, and you can see high unemployment in the future for quite some time.

But the unicorn and rainbow crowd are going to tell you everything, relatively speaking, is getting better.  The fact that your relatives are all unemployed and your job isn’t looking so hot at the moment either will cause you to doubt their assertions.  Do.  Doubt them I mean.  They’re as full of crap as a Christmas goose.  And that’s becoming more and more obvious each day as we watch this dance of the dodgers continue.  Because, you know, you can’t handle the truth.  No, that’s not true.  If they tell you the truth, they too will be unemployed.

“Deficit of trust?”

A true understatement.

~McQ

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31 Responses to Jobs, Unemployment And “A Deficit Of Trust”

  • It’s the new ‘green economy’ plan.  Soon many unemployed workers will be called to work in the government owned farm fields where using organic methods we will plant, tend and harvest crops without all that petroleum based chemical polluting carbon poison pesticide machinery stuff.    Having achieved a true 12th century life style, we will have accomplished many of the primary goals of progressive society in America – Government Control, Jobs for everyone, reduction of reliance on foreign (or any!) petroleum products, green eco-friendly businesses, reduction of CO2 emissions thereby reducing the damage we cause to the earth as humans, creation of renewable jobs and products, and radical Islam will no longer hate us and seek our destruction.  I could go on, and on, but it’s all good, and it’s good for us.


    So, if there has to be a little misinformation spread for morale purposes, well, that’s just the way it has to be for now! So cheer up! Things are looking better! The Unicorns and moon ponies were sighted by NASA, headed for earth and they will bring an age of hope, and change, and the climate will settle and the oceans will stop rising.

    All good, honest, trust us, we’re from the government, we’re here to help.

  • I have read, and I believe, that the biggest obstacle to new hires or business expansion is a fear of future costs due to healthcare, cap and trade, and new taxes, etc.  Until those things are settled growth will be stagnant.

    • No, they think the evil corporations who they intend to fleece, are just blindly continuing to do their daily greed business with no regard for Congressional legislation that will so sweepingly effect everything it touches (which is pretty much everything between health care and cap and trade alone).

  • Dead on.

  • Normal snarkyness aside, this is just another ‘adjustment’ they’ve made in the figures on the economy over the last year, I don’t recall any of these ‘adjustments’ being made to show things were actually better than we thought.

    As far as the 9.7% figure, sure, I’ll buy it, and I’ll just chalk it up to the fact that more people who are unemployed and WERE looking for work reached frustration level and stopped looking last month, because I’d be willing to bet that’s what it represents.

  • You don’t go into a recession with the unemployment reporting statistics you want. You go into a recession with the system you’ve got. Moreover, all government statistics are subject to multiple revisions. And how could that not be? In a nation of 300 million people, the idea that any reporting would be more than just a SWAG is laughable.
    All we are doing is driving the car by looking in the rearview mirror.
    A leader would have a plan. A simple plan. And it would be energetically executed.
    I have only one thing to say to the President in regard to the latest economic statistics.
    Correlation is not causation!

     

  • The Left has absolutely no trust for Republicans and I have absolutely no trust for Democrats. So, I guess we have gridlock in store for us, and that’s just fine with me. If I can’t scale back the size/scope of govt, the next best thing is to hamstring the legislative process so that nothing gets through. What the Left hasn’t figured out is that even Reagan and Bush failed completely at downsizing govt. God help the Left if we ever get a real conservative president with a solid congressional majority.

  • The “unemployment” number is loaded up with fudge factors. A better gauge is the BLS declining  employment-to-population ratio.

  • Caller on Rush had a great point:The libs will search high and low for anybody who could possibly be even remotely considered to be lacking in health insurance to inflate the number to scare / guilt-trip people into supporting their takeover schemes.  Yet, they will just drop people who’ve given up looking for work from the unemployed number to make it look better.  To borrow from Orwell, people who’ve stopped looking for work are vaporized.Yeah, I know: all politicians spin, twist and skew data to make themselves look good and their opponents look bad.  But to claim that unemployment went down while jobless claims have gone up… Unreal.Maybe next week they’ll cut the chocolate ration while claiming it’s been increased.

    • But to claim that unemployment went down while jobless claims have gone up… Unreal.

      The LapDog media spews it, and the populace slurps it up.

  • Unless you live in an Ivory Tower, you don’t need a government economist to tell you that people are really hurting.  One job opening, that used to go begging for qualified applicants in my area, recently had hundreds of applicants.

     

  • What does that mean?  Well it means companies and businesses have found a way to increase production with fewer employees.

    Well, if my anecdotal experience is any indication, it’s like my neighbor, a field rep for a pharmaceutical firm, who is now the only remaining rep in a department that used to (18 months ago) have THREE reps.
    IOW, he’s doing the work that used to employ THREE reps. He’s putting in 70 hour weeks (all on salary, of course), so where is that “productivity” gain?
    The spun BS from this government data knows no bounds.
     

  • Remember that the OFFICIAL unemployment rate is merely those who are activlty on an unemployment program.
    Those who have outlived their benefits, those who are under employed (the Circle-K employee with a BS degree in engineering), those who have just given up, those working full time at a small fraction fo their former wage, etc., are NOT part of this bogus “unemployment” statistic.

  • Someone needs to do some media search for “discouraged worker” from 1990 – 2010.

  • The “Obama Recovery” is now officially part of the political lexicon.   The chart is impressive:
    http://trueslant.com/sahilkapur/2010/02/06/the-obama-economic-recovery/

    • Oh, that’s hilarious!
      When you approach ZERO, there’s not much to lose.
      Got a chart of new hires?
      By the way, your didn’t account for this, http://business.theatlantic.com/2010/02/824000_jobs_will_disappear_on_february_5th.php ,in the second paragraph, Dr. Goebbels.

      • As I discuss in my blog today, jobs are the lagging indicator.  We were losing 800,000 a month in January 2009.  You don’t go from there to no loses on a dime.   To do so in a year is because of the stimulus, and with the dollar stronger now, there is real cause for optimism that the economy might be starting to get better, and jobs will be coming back.
        I know that’s news you don’t like to hear.

        • More horse dung from you, Erb. Any statistics professor of any worth would give that chart an F, for the simple act of “discarding unfavorable data” prior to 2007. Now as far as the dollar, M1 and M2 are as big as ever, still growing faster than the population, yet you claim the dollar is “stronger”? The dollar is “stronger” only because other central banks are inflating their currencies faster. Take a look at the ECB’s balance sheet sometime.
          If you want to talk about “inheriting” a bad economy, a big difference is that Bush was not in Congress prior to becoming president. Get the picture?
          Will you finally, FINALLY give up talking about *anything* related to economics? Stick to historical revisionism and propaganda of the young — you know, stuff you’re actually good at doing.

        • “jobs are the lagging indicator”

          Jobs are A lagging indicator, one of several.
          And, according to your chart, the improvement started before The Obama took office, and before his stimulus was enacted. 

          “ You don’t go from there to no loses on a dime…”

          LOL.
          We sure don’t. Not with The Obama ‘stimulating’ the economy. 

          “… To do so in a year is because of the stimulus,…”

          According to the chart you provided, we didn’t.
          I know you have trouble  comprehending factual written material, but it seems you can’t even comprehend pictures, even the ones you supply.

          Thanks for the laughs, though.

    • *snort*
      Erb is forced to start pointing people to charts made by Pelosi’s office.

    • “The “Obama Recovery” is now officially part of the political lexicon”

      LOL.
      “Officially”!!

      Evidently your standard is an unbiased source who says of himself–
      “I’m a political reporter for Raw Story and a regular contributor for the Huffington Post and The Guardian.”

      So this Sahil guy speaks for the entire world now, eh?? Even without a Ph.D.??

      Thanks Erb, I needed a good laugh what with being confined to the house by the snow.

      I also note that according to the chart, The Obama started improving things within a week of taking office. What a man. No, I take that back, he is more than a man, he is The Obama.

      • Hey, if it’s out there it’s part of the political lexicon — Rawstory is a pretty widely read blog.  I had been thinking that while the stimulus is doing what it was supposed in spurring growth and ending the loss of jobs (and likely to start creating jobs soon), the high debt would risk inflation and a dollar collapse.  The market (which you all seem to believe in) tells me I’m wrong.   The dollar is increasing in value, going from a low of near $1.60 per Euro to now about $1.36.
        Remember, Reagan’s approval hit 38% and he looked like a failure as late as 1983, then jobs finally started returning, they are always the last part of a recovery to take hold.  A look at the trend line is promising.    You do want people to get back to work, don’t you?

        • “Hey, if it’s out there it’s part of the political lexicon”

          Ergo ‘Erb is an ass’ must also be part of the lexicon. Probably more widely agreed upon  than your example.

          “Rawstory is a pretty widely read blog”

          LOL. Man, you are on a roll!

          Those supermarket tabloids are also pretty widely read. I guess that means aliens (extraplanetary) are everywhere. Personally, I prefer my source material to have more connection to reality.

          “The dollar is increasing in value, going from a low of near $1.60 per Euro to now about $1.36.”

          So what? The Euro has been falling compared to most other currencies, too, including the Philipine Peso.

          Ya know, I used to think that getting a Ph.D., even in the silly sciences like Poly. Sci., meant that one had to be able to research and analyze data. Well, I am not afraid to admit I was wrong.

        • PS.

          Thanks for the laughs, though. Keep ‘em coming.

  • “while the stimulus is doing what it was supposed in spurring growth and ending the loss of jobs (and likely to start creating jobs soon)”
    More horse dung. Government spending cannot create net jobs. It can only create jobs while depriving the private sector of an equal monetary amount of jobs.

    • Oh, and spare us the ridiculous logical absurdity. Because we don’t trust the state to create jobs or prosperity, we’re against people getting work?
      You know we’re not, which means you’re a liar.
      But I do oppose people getting work only because I’m forced to pay for goods and services they provide. I don’t need census workers, or these make-work road projects, and there’s a damn good reason such nonsense never emerges in the private sector.

      • One last thing:
        “if it’s out there it’s part of the political lexicon”
        This is, of course, utterly meaningless. “Widely read”? By who? The National Enquirer is “widely read,” yet even it doesn’t claim that Palin writing things on the palm of her hands are a “secret subconscious message.”
        Every regular here knows that “Scott Erb is a horse’s ass.” It’s “out there,” you know, and ergo part of the “politican lexicon” by the very standard you espouse.
        Good lord, do you ever THINK about the tripe you write, or does it just come out uncontrollably?

        • “The National Enquirer is “widely read,”…”

          Bad example. They are up for  a Pulitzer this year. Then again, Walter Duranty got one, too. 

        • “Every regular here knows that “Scott Erb is a horse’s ass.””

          Good example. Used it myself. Great minds think alike and all that.

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