June 10, 2012
The two most frequently cited indicators of our President’s performance by his supporters and opponents are the stock market and the unemployment rate changes. When either is up or down his supporters and detractors have a field day. When either number has even a slight positive indication it is accompanied by cries from the
President's supporters that America is on the way back to economic health, then when these indicators are negative, the world as we know it is about to end according to his opponents. Is either side correct? More importantly are these two indicators even
the most important measures of how our President’s performance should be rated by voters?
Let's begin by examining how official unemployment statistics work. As I have written before, to really understand this complex topic, you have to begin by knowing that the Bureau of Labor Statistics (BLS) has several categories and methodologies that are
used to compile their various employment estimates. The most common “headline” report is the “official unemployment rate”. However, the methodology used for this specific report, while consistent, doesn’t accurately reflect all of the unemployed and
underemployed. For example, the longer term unemployed and those who have given up looking for work, are no longer counted as being unemployed. They aren’t working...but they are not officially unemployed. Also not counted in this report are the
under-employed. For example, if someone works as little as one hour per week...they are considered as being fully employed. Those who are self-employed are counted as
fully employed even if they have little or no work or income. Interestingly in the private sector most companies report their number of employees in “full-time equivalents” (FTE’s) to make sure they have an accurate count. Thus most experts, when all these
factors are considered, conclude that the actual FTE number of workers not employed may be closer to double the official estimates. Today that’s about 25 million Americans
plus their dependents, and many are now increasingly relying on friends, family, charities, and government assistance. Since the last unemployment bottom was reached in 2010, we have averaged adding about 125,000 new jobs each month. Should we feel optimistic? Well the trend may be in the right direction, but the hill to full employment is much higher than we think. For example, don’t forget that we have nearly 150,000 net new job seekers entering the job market each month due to population expansion. Also to be considered, are the huge burdens that this will continue to place on private, federal, and state safety nets which are already strained beyond capacity. The bottom line is that the “official” unemployment rate means very little. The number of unemployed and underemployed and Americans with long-term stagnant wages means everything…and that is not a pretty picture.
Let’s now look at the economic recovery improvements claims. Any nation’s economy has financial indicators such as the stock market indexes and GDP growth rates, and social or human indicators such as employment indexes. Yes, our financial economy has made strides toward recovery. However, much of that reflects the global nature of businesses today. Many very large and successful multinational companies are based in the U.S., but they increasingly sell and produce products globally. Thus their growth and financial performance may be wonderful, and help drive our “financial economy” toward recovery. But this still may not help solve our own nation’s employment problems. This is what is meant by a “jobless” recovery. Thus, our “social or human economy” is not recovering at anywhere near the same rate as our financial economy.
Two of the highest stock market valued American companies are Apple and Google, but they actually employ relatively few Americans...thus their financial performance measures and stock prices can grow with not much real positive impact on the
America’s employment economy. Their performance certainly does help those who own their stocks, or who are fortunate enough to be employed by them.
So, should our President be gaining higher approval ratings for his performance or not?
In my opinion, for voters to be guided primarily by the indicators of employment and financial markets recovery to help make their voting decisions absolutely ignores the much more important critical problems our nation faces. Frankly, most of our current
federally elected can take little pride in their inability to solve our abysmal educational problems, continuing lack of job creation, horrible national debt, continued deficit spending, and the incredible unfunded entitlements that our future descendants will face. Like the rational head of any family or private organization...the questions regarding what we can and cannot continue to afford must be continuously asked and answered. The longer we delay effectively confronting these critical questions, the deeper the hole becomes and the closer our nation gets to a tragic ending. We cannot avoid shared suffering, but must begin sooner rather than when it will be literally too late. For us and our leaders to continue to pretend that we are the wealthiest nation in the world is foolish and dangerous. A nation cannot make these claims when it must
borrow 40+% of what it spends. In my opinion, President Obama has proven that his lack of prior real world experience certainly did not prepare him to lead the largest economy in the world. We simply cannot afford to continue to trust an amateur to run our country when it is in such distress. The truly most important question is whether or not we the people will have the wisdom and courage to also fire all incumbent lawmakers, and then demand that those we vote for in the coming election cycles commit to developing a solid education strategy, a realistic job creating environment, and putting our nation’s financial footings back on firmer ground as their top
objectives...beginning immediately...no matter what! Time is not our friend! For us to continue the delusion that incumbents will somehow change behavior is simply naïve at best!
These are my opinions. What do you think?
Mike Tower
Hendersonville, NC'
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