Another Unemployment Rate Fairy Tale
Was Friday's "Employment Situation" report from the Bureau of Labor Statistics (BLS) good news? Sure, if you live on Fantasy Island. Back here in America? Not so much.
The BLS reported that the closely followed "headline" (U-3) unemployment rate fell to 8.3% in January. This represented a decline of 0.2 percentage points from the previous month's level and the lowest level since February 2009. So, why isn't this good news?
The problem isn't just that the employment report wasn't good news, it's that the employment report wasn't even news. Rather, it was simply the latest monthly installment of the long-running story contained within President Obama's so-called "economic recovery": falling labor force participation. For the past 31 months, discouraged workers have been dropping out of the labor force in unprecedented numbers.
At the end of the recession (June, 2009), the labor force participation rate was 65.7%. In January 2012, it was 63.7%. The difference between these two numbers represents 4.8 million people who have given up on looking for work.
If the labor force participation rate for January 2012 had remained the same as it was in December 2011, the unemployment rate would have risen by 0.2 percentage points to 8.7%, rather than falling by 0.2 percentage points to 8.3%.
However, this comparison does not even begin to show the damage being done by Obamunism.
If the labor force participation rate had remained where it was when Obama took office (65.7%), the unemployment rate for January 2012 would have been reported at 11.0% rather than 8.3%. In January 2009, unemployment stood at 7.8%.
The authors of Obama's $787 billion "stimulus" program predicted that it would reduce unemployment to about 6.4% by January 2012. Adjusted to the labor force participation rate assumed in the stimulus plan, the January 2012 unemployment rate was 11.2%. The difference represents a shortfall of 7.6 million jobs from what Obama promised when he took office.
From a GDP growth perspective, Obama's recovery has been the slowest economic recovery in U.S. history. From an employment perspective, there has been no recovery at all.
At the end of the recession in June 2009, America was 12.6 million jobs short of full employment (defined as the employment conditions that existed at the peak of the Clinton boom, in April 2000). In January 2012, after 31 months of "recovery", we are 15.2 million jobs away from full employment. In January 2012 alone, we lost ground with respect to full employment by 244,000 jobs.
If Obamunism could produce a real economic recovery, it would have done so by now. By proposing a combination of $447 billion in additional "stimulus" and huge tax increases on investors, the Progressives have admitted that they are fresh out of ideas. They have been reduced to crowing over economic reports that are, in fact, bad news.
It's time for the Progressives to leave Washington, but they will need some place to go. Given their model of economic reality, they should feel completely at home on Fantasy Island.