The US employment report posted last week by the Labor Department paints blurred picture. While unemployment remained at 5.1%, this is but a slight of hand created by fuzzy numbers. Here are some of the stats reported by the Wall Street Journal:
- During September only 136,000 new jobs were created, far short of what economists predicted.
- The Labor Department decreased the 173,200 and 245,000 jobs supposedly created to August and July down to 136,000 and 123,000 respectively.
- During the summer of 2014, approximately 250,000 jobs per month were created.
- Wage growth was stagnant during August, down by a penny from July.
The government reported that the unemployment rate remained steady at 5.1% for September. This was accomplished by fuzzy accounting. The government, in its infinite wisdom, does not count Americans that have given up on finding full-time employment as being unemployed. The fallacy of this accounting practice is demonstrated by the workforce participation rate being at its lowest levels 40 years, falling by another 0. 2% in September to just 62.4%.
The economy requires approximately 200,000 new jobs monthly to keep up with overall workforce growth. Given we are now seven years into President Obama’s economic policies, the weak employment numbers show failure. The programs include the huge Stimulus spending initiated during his first year in office and continued with other interventions including Cash for Clunkers, mortgage relief, green energy programs, etc. Instead of recognizing the failure of these interventions, Progressives including the President suggest policies that will further depress wages. This includes promoting additional immigration that will add pressure on wages, and increasing the cost of labor through Obamacare and a higher minimum wage.
The Federal Reserve’s policies have also proven ineffective. While the Fed has used historically low interest rates as a cure-all for the economic maladies, these policies were counterproductive. However, the Fed is now in a conundrum. Given the weak jobs data it is fearful that if it raises interest rates that economic growth will be further hampered. But, interest rates will inevitably go up and that will not be a good day for the economy.
Since the economic meltdown of 2008, politicians from both parties promised economic fixes without pain. This alchemy is not possible. There were severe economic imbalances that needed the right themselves after the meltdown. Governmental interventions stop these necessary events. Sooner or later they will rebalance. Like a boiling pot, the longer the lid is kept on the more violent the pressure release will be.