Many news and media channels are embracing and heralding the latest monthly economic report released by the Bureau of Labor and Statistics as a light at the end of the tunnel… or so it appears there is.
On the surface, it has a nice shine to it.
Having increased nonfarm payroll employment 236,000 jobs is something to note.
‘The number not in the labor force‘, that is, the number that have dropped out of the labor force for one reason or another, increased last month by 296,000.
The total for that number now stands at 89.3 million people — for any country, this is a substantial pool of resources that is not be utilized.
To compensate for this, 296,000 jobs need to be created just for this group alone, in addition to the 236,000 that were already created, or a total of 532,000 jobs created.
But one month alone doesn’t constitute a need to be concerned.
However, the history of this number has not been very good since 2008…
Even if a country does not add one job to their economy, they can still see their unemployment percentage slide just by having fewer workers in the job market each month.
The equation for calculating the unemployment rate says this is so…
- 4.8 million unemployed longer than a year : 20 months
- 12.7 million total unemployed : 54 months (4.5 years)
- 3.6 million discouraged : 15 months
- 89.3 million not in the labor force : 378 months (31 years)
Being a free enterprise, as well as a republic with a democratic process, we can’t control consumer and business purchases, so sustaining a sound economy is almost never attained for long periods of time, 10-12 years
Every country has new entries into the job market, and the U.S. is no exception.
However, the U.S. is already experiencing a drop in the number of new entries to the job market for two reasons…
- the expectation of employers is higher for new entries due to a higher level of technology used, requiring skills not yet gained
- many companies are not replacing those that have exited their workforce due to restraints on capital and research, mostly resulting from government taxation and costly government regulation
At that pace, there will be 66 million new jobs and a U-6 of nearly 5%…
The U.S. did have a U-6 of 20% in 1982 in the first 2 years of the Reagan administration but this was quickly stemmed with the Reagonomics, returning to levels of 5% by 1988.
President Clinton faced the same dragon in 1992, seeing the U-6 go to 15% by his second year and then taking both his terms in office to reduce it to 5%.
President Bush also faced the same dragon with the U-6 hitting 12% in his first two years of office as well, and like his two predecessors, was able to
Since President Obama has been in office, the rate at which the U-6 increases equals the rate experienced during 1930 when it hit 40% (while the U-3 was 25%) — and , unlike his predecessors, it never stopped increasing during his first term in office, and is still going strong with the first quarter of his second term.
It remains to be seen if the U-6 will level off, never mind start declining.
Given the government and economic policies in place today, there is much doubt this will be the case as the policies that lead to the turn-around of the U-6 by prior Presidencies are policies abandoned by the Obama administration.
There are other reasons to be concerned…
- Money supply too high : the economy is flooded with paper money and the history of such a policy is the same. Hyperinflation will result if the amoung of currency in an economy is too high. There is not one country that has escaped this principle. And the longer a government took to do something about their supply of currency, the deeper the damage and the longer the turn-around.
- stagnation : Prices are increasing and the economy is stagnant. This is particularly true for staple prices — food, electricity, oil, gas, water. All have increased dramatically in the last 4 years. This was the downfall for Jimmy Carter inspite of his ability to produce jobs in the private sector.
- cost of goods and services increasing dramatically in the last 4 years : the result of increased prices of staple items means everything goes up, period.
What Are Your Thoughts??
✔ What is America’s top economic challenge?
✔ Is it a good thing that nearly 40% of Americans are off the tax rolls?
✔ More than 20 Nations have Flat Tax systems, why shouldn’t America do the same?
Please share your thoughts with our audience in the comments section below!
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