The simplistic way to approach today’s Unemployment Report would be to simply point the finger. Certainly, that would be the logical reaction to what this president and his congress have done to the American economy.
10.2% unemployment is bad enough for the country and its workers. However, a deeper investigation into the Department of Labor’s reports this week uncovers a more disturbing trend that spells disaster for the economy moving forward if it is not corrected.
Aside from perhaps the GDP, employment numbers are the single most prominent market-moving indicators on the board. They provide comprehensive reports as to the state of the economy i.e. how many people are looking for jobs, how many people have jobs, what workers are getting paid and how many hours they are working.
Given those variables, many people have asked me how GDP can increase while unemployment continues to surge. The answer rests with the anti-business policies of the executive and legislative branches, as well as the outstanding performances of those still contributing to the economic progress of the economy.
According to the Department of Labor, the American worker increased productivity by a whopping 9.5% during the 3rd Quarter. This figure far surpassed the consensus expectation of 6.3%. At the same time, unit labor costs decreased by an equally-whopping (-)5.2%, also exceeding the market consensus of (-)3.9%. In other words, the American worker is exceeding expectations to keep this economy afloat, while employers’ abilities to add to the workforce and lift this country out of recession is being equally hamstrung.
This brings the discussion to the federal government’s role in this process. From the time they took office, this congress and president wasted money on a so-called “stimulus” to expand the size of government in lieu of implementing policies to stimulate private-sector growth and allow businesses of all sizes to capitalize on the strength and productivity of the American worker.
Now, they debate the passage of a nearly $2 trillion government program that will ensure the destruction of the Insurance Industry and the hundreds of thousands of workers’ jobs that accompany it. Once what amounts to a national health care system is passed and signed, the time it will take for investors to withdraw their support from the insurance industry will be able to be clocked with an egg timer.
This is not a partisan issue. This is an economic issue. Members of all parties rely on private-sector employment to feed their families and pay their bills. The American worker cannot continue to carry this economy without help. They need new investment on the part of the businesses that employ them - and those businesses can’t expand their workforces when they are paying new taxes for government health care programs, Cap and Trade taxes, and any other government-mandated drain on their resources.
If there is an issue that RedState readers need to be reinforcing, it is the disastrous results of the assault on this nation’s economy and its businesses. Leave the code words (communism, socialism, etc.) in the vault for now. Many people dismiss this as hyperbole and rhetoric. You will make them understand the gravity of Democrat policies when you show them precisely how those policies are destroying their economic futures. When that happens, you will have the environment you need for a conservative realignment and true change the country can believe in.
They never had the slightest intention of stimulating the economy
Achance Friday, November 6th at 10:58AM EST (link)in any meaningful way. It was simply almost a trillion dollars worth of spite; recompense to Democrat constituencies that had suffered at the hands of evil Republicans for all those years. Next year when the economy in in even more desperate straits, they’ll pour stimulus money into the hands of their front groups and if you want a job, you’re going to have to be a supplicant to the government or one of those Democrat contractors, non-profits, unions, and their other interest groups.
Comrade Obama has no interest in doing the right thing as anyone here would see the right towards the American economy. He and his makers want to eliminate the US as a singular World power and reform our economy to some socialist form. Most of what they’re talking about looks a lot like Wiemar Germany. Most studious communists look at Wiemar as a sort of ideal until those evil capitalists brought on a World wide depression and made Wiemar unable to keep up with the social welfare spending. That’s the balance they have to strike here too. They have to keep enough economic activity going to keep the masses sullen but not mutinous. So far, they’re keeping all the balls in the air, but printing and borrowing money to do it. Consequently, we are now completely in thrall to our creditors and our policy freedom is limited by their noblesse oblige. That’s one goal already accomplished; the US is no longer a singular World power able to pursue its interests without a by your leave to anyone.
I can only assume that the Chinese are waiting until after the ‘10 elections on the off-chance that the revanchists might return to power then before they take Taiwan and we won’t be able to lift a finger. South Korea won’t be far behind.
In Vino Veritas
Good points...
Hoosier Economist Friday, November 6th at 11:11AM EST (link)If there is a positive to be taken from these developments, it is the potential for conservativism to take hold across the country and be embraced during the 2010 midterms. But I think it is imperative that conservatism be pitched as an economic solution rather than a political one. The country still equates political conservatism (however incorrectly) with George W. Bush. Make conservatism the ECONOMIC solution and the rest will fall in place.
Careful with Productivity Stats
quill67 Friday, November 6th at 9:45PM EST (link)Productivity numbers can sometimes be very misleading. Since your user name indicates you are an economist that me remind you of something you probably already know. When a firm increases its production and moves up its total product curve, the marginal product of labor falls (worker productivity falls) and the cost of the next labor hour increases. Hence, if a firm reduces its output, it moves down its total product curve and marginal product of labor increases (worker productivity increases) and marginal labor costs fall.
When an economy moves into recession firms reduce output so productivity numbers appear to improve but while there is undoubtedly some improvement in technology that may improve productivity, much of the statistically reported gain is simply because firms can no longer afford to hire the less productive workers.
I appreciate the input, but...
Hoosier Economist Saturday, November 7th at 12:12AM EST (link)…your post makes some pretty bold (and fairly pessimistic) assumptions. Namely, that firms are reducing output to give the appearance of increased worker production instead of assuming that workers are actually producing more. I’m sorry, but the facts simply do not match your assessment.
Durable goods orders in September increased 1.0 percent subsequent to a 2.6 percent drop in August. Overall construction spending increased 0.8 percent in September after dipping 0.1% in August. You don’t see economic improvements like that without an increase in productivity to match the demand.
Consumers are spending. Consequently, producers are making demands of their reduced workforces that employees are making good on.
In addition, keep in mind that year-on-year, productivity improved to up 4.3 percent in the third quarter from 1.9 percent the previous quarter and year-ago unit labor costs dropped to minus 3.6 percent from down 1.2 percent in the second quarter (Source: Haver Analytics).
In other words, the increased productivity is good news for businesses and bad news for prospective employees. With increased productivity on the part of existing workers, businesses are not feeling the need to take on additional labor liabilities. But don’t let that dissuade you from underestimating the role workers are playing in keeping this economy afloat.
One last word regarding your assertion that much of the statistically reported gain is simply because firms can no longer afford to hire the less productive workers. My response to that would be: …and?
Last I checked, it makes little sense economically to keep unproductive workers on the payroll during any point of the economic cycle. Keeping unproductive workers employed is a tool of the unions, not sound economics.
Sad that so many are still operating under the delusion...
Dave Saturday, November 7th at 12:44AM EST (link)…that the current administration is actually trying to improve our economy.
The private sector is rapidly headed for extinction, government revenues are tanking, yet we are being told that a recovery is just around the corner.
Right.
This economy is purposely being imploded, and until the Obamanistas are driven from power, that will not change.
There is no such thing as a “jobless recovery.”
It appears government education has finally won the day, as this nation is now populated by economic illiterates.
Idiots all.
-Dave
Our elected representatives have failed us.
The American public will get an education...
Hoosier Economist Saturday, November 7th at 6:41PM EST (link)…when their jobs are next on the chopping block.