Is 8.6% Unemployment Good News?

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By Mr. Curmudgeon

To hear the media tell it, the economy is improving. Today, the Department of Labor announced that the U.S. unemployment rate dropped to 8.6% – from 9.2%. That number comes under the definition of U-3, a Department of Labor Statistics sampling of unemployed Americans, which represents citizens receiving unemployment insurance while actively seeking work. The more troubling statistic comes under the dire definition of U-6, which represents Americans who have run through their unemployment insurance and still cannot find work or are in part-time jobs. That rate –real U.S. unemployment – is 15.6%.

The troubling underlying reality to the unemployment figure above is a chart of past U.S. recessions and recoveries.

 

 

 

 

 

 

 

 

Source: BusinessInsider.com

 

In past economic downturns, as the chart above clearly shows, recoveries have traditionally been sharp, forming a “V” shape as employment opportunities increased. However, as the projections for job recovery from the “Great Recession” of 2008 illustrates, a large segment of America will be left unemployed or underemployed, forming  what Democrats classically call a “permanent underclass.”

Welcome to the new normal.

In the coming days, the media will advance the fiction that President Obama’s economic programs (stimulus, green energy, increased exports of weapons to Mexican drug lords) are brightening the nation’s economic prospects.

The darker reality is that Obama’s “success,” one he will surely campaign on, rides on the backs of the chronically unemployed not counted among the Department of Labor Statistics’ U-3 jobless.

In the book “The Forgotten Man,” author Amity Shlaes explored the damaging effects of FDR’s New Deal remedies on Depression-era Americans:

“Keynesianism also emphasized government spending. Yet focusing on consumers meant that Washington neglected the producer. Focusing on the fun of experiments neglected the question of whether unceasing experimentation might frighten business into terrified inaction … Supplying generous capital to government made government into a competitor that the private sector could not match. Keynesianism provided the intellectual justification and the creation of constituencies.”

These constituencies have expanded beyond Roosevelt’s wildest dreams. And Obama hopes to marshal their power to win a second term as president. Today, just as in FDR’s time, the victims of big-government economic manipulation remain the same: the statistical sampling called U-6 … the hopelessly unemployed … the “forgotten man.”

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