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Tuesday, October 1, 2013

Who Do You Believe: The White House and Wall Street -- or the American People?

The White House and Wall Street keep telling us that the economy is improving, and they point to the unemployment rate and other economic indicators.

This is starting to worry me.

The 7.3% reported unemployment rate from the Bureau of Labor Statistics is an illusion, because it doesn't include a shrinking workforce, which reflects the deeply discouraged unemployed who have simply given up on seeking work, as well as the grossly underemployed. According to Gallup, real unemployment plus underemployment is 17%, which means roughly 20 million or more citizens wish they had a full-time job with a consistent paycheck. But we don't hear the president or many Wall Street leaders saying, "More than 20 million people are miserably unemployed or grossly underemployed -- so things can't be too good."

What’s more, the percentage of American adults holding full-time jobs as a percent of the total adult population is only 43.5%, as measured by Gallup’s Payroll to Population employment rate (P2P).

Now, the economy grew at 2.5% in the second quarter of this year, according to the U.S. Department of Commerce, which is surely better than the pathetic and anemic 1.1% first-quarter growth. But in my view, a blended 1.8% means the economy is barely keeping up with population growth, and the economy added only 169,000 jobs in August. No one could be excited about these numbers. From where I sit, we need a minimum of 4% growth for the American economy to boom again.

But don’t take my word for it. If you want to know the truth about the American economy, ask Federal Reserve Chairman Ben Bernanke, who shocked the world in mid-September when he announced that there would be no change in the Fed’s $85 billion-per-month asset purchase program. The Fed wouldn’t be continuing its “quantitative easing” if it thought the economy was improving substantially -- in fact, Bernanke’s surprise announcement belies the White House and Wall Street’s rosy claims.

Or better yet, ask the American people. Gallup’s Economic Confidence Index fell seven points in the last two weeks, which means that Americans’ confidence in the economy is now much worse than it was in May and June. The American public is clearly seeing and feeling something quite different about the economy than what they’re being told. Cheerleading from the White House and Wall Street is falling on deaf ears.

Who are you betting on? Washington and lower Manhattan? Or the American people? I’m putting my money on the wisdom of the masses.


Anonymous said...
October 2, 2013 at 11:43 PM  

I agree with this article, but not necessarily the root cause of such dismal numbers. Over 40 years ago starting pay for most industries was higher, minimum wage was higher and today the average American consumer has much less spending power, much less discretionary spending. An economy can't grow if consumers are not spending, and over half the population has no more money to spend, and that leads to massive credit card debt. As more and more consumers land remedial part time jobs at minimum wage, the U.S. economy will eventually enter a long era of stagflation. It festers on itself. For example, a typical mechanical engineer in 1960 earned the equivilant of $80,000.00/ 2013 dollars. Today that same person averages $55,000/yr, about what a high school teacher earns. More and more Americans are seeking and finding higher paying jobs in Australia, especial in professional fields. The way things are going, the next generation of Americans will have to move to raise their standard of living, just as the generation of the turn of the last century had to move to the U.S. to improve their lives.

john gallagher said...
October 3, 2013 at 10:33 AM  

I believe the confidence in the economy has waned due to an obvious roadblock on the budget and debt ceiling. It is shocking to see an organization like Gallup ignore the obvious to make a point. Knowledge is Gathered.

Keith said...
October 4, 2013 at 5:19 PM  

I think Mr. Clifton has a good view of the future world. There are not enough jobs, and the government is responding by raising taxes instead of working on job creation. The majority of Americans know the truth. We are falling behind.

Anonymous said...
October 7, 2013 at 3:33 PM  

John Gallagher seems to agree with Wall St. / Obama.

Anonymous said...
October 10, 2013 at 2:21 PM  

We always hear that the shrinking workforce is due to discouraged workers, but no one ever talks about retiring baby boomers as a contributor to this decline. I would like to see more in depth data that analyzes how much of an effect the aging baby boomer generation is having on U.S. workforce figures.

Anonymous said...
October 10, 2013 at 3:40 PM  

Great article. Main point is "truth" or "lies". We need more truth and less deception. Thanks for the article.

Anonymous said...
October 11, 2013 at 9:00 AM  

Look at statistics on various employement rates by age groups, the 55+ group has the highest rate of participation and is the one primarily increasing...which suggests a greater percentage of boomers are both choosing to remain in the workforce, and actively returning to the workforce. They are not a large component of the shrinking workforce.

Nancy said...
October 12, 2013 at 8:38 PM  

I believe the american people and not the polls or the government which is being run by a delusional president overstepping his bounds and not receiving advice that he does not want to hear (the truth).

Anonymous said...
November 3, 2013 at 5:12 PM  

Ahem ... exactly WHO is Wall Street? WHO protested against Wall St .. you do remember Occupy Wall Street don't you? It sure as hell wasn't the Tea Party. Selective memory or blatant spin?

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