The Bureau of Labor Statistics recently announced that nonfarm payroll employment rose by 200,000 in December, and the unemployment rate dropped to 8.5 percent.
The liberal media hailed this report as proof that the economy is recovering.
President Barack Obama touted the numbers as clear evidence of a resurgence, but said additional steps must be taken to put more Americans back to work. He pressed Congress to extend the payroll tax cut, set to expire in February, for the full year.
Of course, there is another side to this issue, which Obama didn’t mention.
There are a few points you must consider when looking at the numbers such as: the underemployment number, work-force size, and seasonal employment.
The number of those considered underemployed, including those who've settled for part-time work but still want full-time jobs, dropped to 15.2 percent in December from 15.6 percent the month prior. Still, at 15.2 percent that number is alarmingly high, representing a large portion of Americans who aren't adequately employed and likely are not contributing to economic growth.
Any improvement in the unemployment rate will always be welcome news.
The difficult issue with this jobs report is being able to understand just how close the report comes to reflecting the real unemployment rate.
Is a worker who was once making $25 per hour, and is now working in a part time job at $10 per hour or less, considered fully employed?
Additionally, workers no longer receiving unemployment compensation, and not reporting in at the local unemployment office, will not be factored into the unemployment rate. Many of the extra retail workers hired for the holiday sales season will be laid off in January after all the returns rush is over.
All of these employment factors should temper the exuberance over the December job numbers. The actual unemployment rate may be far greater than the 8.5 percent rate reported in the December report.
Many economists use the term “The Great Recession” to describe the recession which began in December 2007. Since 2007, billions of dollars of taxpayer money were provided to financial institutions, which were “too big to fail.”
Sweeping regulatory attempts to fix the crisis included the Dodd-Frank bill and the Consumer Protection Act that established The Consumer Financial Protection Bureau. Most Americans know little about this act, but it will have far reaching consequences for the way financial business is conducted in this country.
Even with all of the government bailouts and regulatory effort, the unemployment rate remains at an unacceptable level.
We will know that the economy is on the way up for good when significant numbers of manufacturing jobs return, and when the retail sector is able to realize several months of sustained growth.
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