11/12/13 Sour Economy


Last Friday, the government announced employers added 204,000 new jobs.  Unemployment remained stuck at 7.3%. 

Underlying data indicates our economy is worse for American families than is obvious by this report.

The Federal Reserve pumps $85 billion into the economy every single month. A trillion dollars a year.  They call it “quantitative easing.” But it’s the government printing money we don’t have. Causing inflation.

The Fed claims the inflation rate is very low.  But anyone who shops for groceries or pays bills knows this isn’t true.

Instead of using the more accurate CPI, the consumer price index, to calculate the inflation rate the Fed uses “core inflation.”  In which food and energy costs are stripped out.

[The Fed argues that food and energy prices are too volatile and distort the true inflation rate.]

There’s more bad news.  The real unemployment rate is far worse than reported.
[It’s all how the numbers are presented. There are over 154 million people in the US labor force. They are divided into two categories: “employed” and those officially classified as “unemployed.”  The official designation is very important.]

[The labor force participation rate is a dismal 62.8%, the lowest rate in four decades.]

Anyone who is unemployed and has not looked for a job in the previous four weeks is dropped from the government’s official unemployment numbers and is labeled as “not in the labor force.”  For unemployment calculations, the government pretends these people don’t exist.

932,000 were placed in this category last month for a new record 91.5 million labeled “not in the labor force.”  Nearly 11 million people have been moved into this category in the past five years.  If they were included in the calculations we’d have an official unemployment rate of 14.3%

And this doesn’t include the hundreds of thousands of full-time jobs that have been turned into part-time jobs.

There is fascinating discussion on changes to how the Consumer Price Index is calculated that is worth reading (here).

For more information on the U.S. Federal Reserve see this segment of Behind the Headlines.]

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