The Bureau of Labor and Statistics' (BLS) February jobs report
was greeted with no small amount of cheerleading from the White House. And true, the addition of 242,000 jobs to the U.S. economy is indeed welcome news. But President Barack Obama and company may want to tamper down the celebration just a bit.
That’s because, following the pattern set since the recession technically ended in 2009, the country has been continually subjected to carefully selected economic data calculated to bolster the political fortunes of those in power. But the biased and incomplete figures do not fully capture the state of America’s economy or the ongoing angst over its fate in places far from Washington.
First of all, a dig into the new BLS report
reveals that the majority of the newly created jobs were in fact low-income and part-time positions. Couple this with the fact that wages actually fell by 0.1 percent and things get a bit less rosy.
Unemployment is at 4.9 percent, but that number only reflects all those who are actually looking for work. A near record ninety-four million Americans are still absent from the workforce. This is artificially decreasing the true employment rate, which is closer to 9 percent when part timer workers looking for full time work and those who have given up looking for a job but still want a job are factored back in.
It wasn’t always this way. Until 2010, there was little deviation between the unemployment rate with and without this data. But for reasons that economists have not been able to explain, the deviation under the Obama administration has gotten dramatically worse.
This puts the Federal Reserve in a tight spot. Its targeted 2 percent inflation rate will likely require unemployment to hit four percent with the current flawed methodology. That’s because when there is full employment, wages eventually increase as employers compete for workers by offering higher wages. And when these men and women are hired with higher salaries they spend more. That results in increasing prices, which is how the Fed gets to their goal of 2% inflation.
But the huge gap in the labor force, besides distorting the actual unemployment rate, means that millions of Americans are earning and spending very little. And when new jobs do open up, those who are trying to reenter the workforce flood the employer, keeping wages low. That’s one reason why inflation has lagged behind good employment numbers while the Fed has anticipated a robust economy for so long.
Former Chair Ben Bernanke admitted as much last year when he confessed that the Fed is “groping” to find the true employment rate.
In this sense, the country’s central banking system has much in common with its citizens.
Despite constant assurances that a sharp and sustained upturn is just around the corner (lest we forget the Recovery Summer tour of 2010) and the White House’s tendency to pat itself on the back over even remotely positive economic news, most Americans have yet to feel the impact of all this positive data. Which leads them to understandably wonder if any of it is even true.
served as the 38th Director of the United States Mint from 2006-2011. Moy is the chief strategist for Fortress Gold Group, a provider of gold IRA rollovers and physical U.S. gold and silver bullion coins for direct delivery. Read more from Ed Moy — Click Here Now.
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