“Happy Days are Here Again…” and again, and again, and again, as the good news rolls out of the Beltway and Wall Street.
Unemployment fell for the first time in fifteen months, falling from 9.5 percent in June to 9.4 percent in July. Granted, this is good news similar to the good news that I only lost one leg in the explosion, but we gotta keep believing the glass is half full even as the water continues to drain out of it.
And the stock market is humming, driven, as always by a mob psychology that bears little relationship to reality.
Paul Craig Roberts does an admirable job of deconstructing some of the numbers rolling out of Washington.
For example, With GM and Chrysler gutted, how could the auto industry add 28,000 jobs? Simple, you throw in a “seasonal adjustment.” In the past, when America still had an auto industry to brag about, plants shut down in the month of July so the plants could retool for the new models. The BLS figured that the laid off auto workers weren’t really laid off, even though they were, so it arbitrarily added 28,000 phantom jobs, thus pretending that workers who weren’t getting paid were.
It conveniently overlooked the fact that, this year, plants weren’t shuttered to retool; they were shuttered permanently.
Then there’s the infamous “Birth-Death Model.” The Bureau of Labor Statistics (BLS) figures that when a business shuts down, it doesn’t report the lost jobs, nor do the new jobs created by a business just opening find their way into the numbers. So the BLS pulls a number out of the air, one arrived at during a period of economic growth, which never fails to yield an increase in employment.
No doubt more businesses went under in July, but habit is a hard thing to break.
Then there’s the old Clintonian sleight of hand that boots those who have been unemployed for too long off the books. These unemployed are no longer unemployed because they no longer exist.
Before there can be an economic recovery, the public’s confidence must be restored, and Washington will never do that by fudging the numbers. Once one set of books has been cooked, the public will come to the conclusion that all the numbers have been cooked.
Disraeli once said there are lies, damn lies and statistics. What he should have said was that there are lies, damn lies, statistics and the BLS.
But, hey! “Happy Days are Hear Again.”