“It’s morning again in America.” That was the signature line from President Ronald Reagan’s famous campaign ad during his 1984 reelection bid. The message was perfect in its simplicity – that Reagan’s conservative policies had brought American out of the darkest depths of a recession and into the light of a new day.
The fact is, the strength of the economy is generally the first thing a president will cite in his reelection bid. Which brings us to a curious situation. Friday’s job numbers seemed to be the strongest evidence yet that the economy is gaining steam. And yet, President Obama largely withheld his excitement.
“We have made real progress,” Obama said Friday after the employment numbers were released. “Now is not the time to stop.”
Doesn’t exactly sound like the triumphant president, who is ready to point to his economic accomplishments come next November does it? It’s not even the calm reassurance of Reagan’s ‘morning in America.’
And with good reason. Wading below the positive jobs report, which showed 200,000 jobs were created in December, is a current of data that could wash away any positivity. The biggest problem is that people continue to drop out of the labor force, making the unemployment rate look much better than it truly is.
Economics blog Zero Hedge explains:
“One does not need to be a rocket scientist to grasp the fudging the BLS [Bureau of Labor Statistics] has been doing every month of years now in order to bring the unemployment rate lower: the BLS constantly lowers the labor force participation rate as more and more people “drop out” of the labor force for one reason or another.
. . . In order to back out of this fudge we are redoing an analysis we did first back in August 2010, which shows what the real unemployment rate would be using a realistic labor force participation rate. . . It won’t surprise anyone that as of December, the real implied unemployment rate was 11.4 percent – basically where it has been ever since 2009 – and at 2.9 percent delta to reported, represents the widest divergence to reported data since the early 1980s.”
In other words, the unemployment rate hasn’t changed, what’s changed is the historic amount of “fudging” that the BLS is doing to make things look rosy. And although it’s unlikely that there is anything nefarious going on, Zero Hedge finds an interesting point: “Extending this lunacy, America will officially have no unemployed, when the Labor Force Participation rate hits 58.5 percent, which should be just before the presidential election.”
Sadly, even the more accurate 11.4 percent figure doesn’t truly encapsulate the problem. To truly gauge our continued economic problems we must look at the U-6 rate, which takes into account part-time workers that would rather be working full time but have been forced to settle. Using this figure, unemployment stands at a whopping 15.2 percent.
Oh, and one other thing, courtesy of AEI’s Jim Pethokoukis:
“Then there is that 200,000 number. As Goldman Sachs points out:
Part of the strong gain reflected a 42k increase in employment for “couriers and messengers”, which likely reflects temporary employment for holiday gift delivery persons. As similar spike occurred last December and was reversed the following month. . .”
Obama was right to be reserved. The numbers are undoubtedly better, but they are also undoubtedly a flawed representation of the true unemployment picture. No doubt the Obama campaign team knew that standing behind them would be a risky strategy.
If Obama truly wants a “Morning in America” moment, with America positioned for long-term growth and prosperity, he’ll have to do more. Namely, he’ll have to get Washington out of the way.