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Cookies for Santa

We’ve had a lot of sweet economic news lately.  The Gross Domestic Product was announced to have grown at an annualized rate of 3.5% in the third quarter, which even after it was revised down to 2.8% seems like a decent number.  The number of new unemployment claims was down to 474k last week, and the unemployment rate fell from 10.2% to 10.0%.  It’s all good, right?

Plus, we have less than two weeks until Santa arrives!  Better make cookies!

The problem with the numbers that tell the story of our economy is that they are all heavily processed by the time we get them.  Like so much cookie dough in a tube, the numbers do not exactly make for the kind of diet that encourages anything other than obesity.  The problem is, of course, that this is the time of year and the culture when good, fattening news goes down pretty easily.

Let’s start with the 2.8% annualized GDP growth.  That may sound impressive, but the total Federal deficit is running about 12% of GDP.  If you take away the “stimulus”, the rest of the economy is collapsing about as fast as it did in the last Depression.   Granted, that’s why we run a deficit in hard times, at least according to modern Keynesian theory.  But we haven’t had a positive GDP without this stimulus since 2001.  At what point does the cookie dough stop being a treat or a pick-up and more of an addiction?

Then there’s the issue of declining initial claims as reported by the Bureau of Labor Statistics.  The 474k reported is what we call “seasonally adjusted”, which is to say that like everything this time of year it comes with some extra lard and sugar.  The actual number is 665k new jobless claims, – a 95k improvement over last year, but not exactly the stuff gingerbread dreams are made from.

But we can say that continuing claims for unemployment are falling, down to a total of 5.16M people, yes?  Well, not really.  What happens is that the “continuing claims” number of people on unemployment is based on people taking state unemployment insurance for 26 weeks – after that, they go on what’s called the “extended benefits” rolls, which are paid by the Feds.  The total number of people collecting benefits is about 10 million, all totaled, averaging about 33 weeks.  That means that those losing their jobs now can expect to be on the Government Cheese until way out into nearly Labor Day.

The unemployment rate? That doesn’t count “discouraged workers” who haven’t been looking for 4 weeks.  Anyone out of work who hasn’t gotten into that “holiday spirit” since they collected Halloween candy doesn’t count – and if they did, that number would be 10.5%.

So what does our holiday diet of economic numbers look like?  If you listen to the nooze, you can expect the kind of feast that is more likely to start a diabetic coma.  A more cynical person might tell you that a kind of coma is exactly the plan, but not me.  No, I’m only going to hint at it strongly and let you decide.  That way, it’s not my fault when you decide to ditch the eggnog and just go right for the holiday Tequila.

Happy holidays, everyone!  Don’t forget to put something out for Santa!

10 thoughts on “Cookies for Santa

  1. What happens when they run out of these ‘adjustments’? Don’t we have to get the real numbers sometime?

  2. The numbers have nearly always been cooked – certainly, GDP growth never looked at the Federal Deficit, and the unemployment numbers have gradually become stupider with each administration.

    But these have always been relatively small effects. As we go into serious meltdown, what were once small tweaks to make things look good are now very big problems.

    We’ve long had a problem with people disappearing, in an official sense, it’s just getting worse. I couldn’t work this piece into the Christmas Cookies theme:

    https://erikhare.wordpress.com/2008/06/17/desaparecidos/

  3. Kudos for getting at the problem, but unemployment is even worse than 10.5%. U-6, the broadest measure of unemployment, is at 17.5%, which includes the “discouraged workers” and those working part-time that would rather be working full time.

    Even that may underestimate the size of the problem by as much as 5% because it does not include people who have voluntarily taken time off for school or to care for their families.

    The “headline” number of 10.0% is a total joke, and everyone knows it. The media keep repeating it even though they know better because they are afraid of starting a panic. It’s all total BS.

  4. Dale:

    I totally agree with you, and I usually use U6 as the more accurate number. We should also point out that the gap between U6 and the headline U3 is usually only 4-5%, but it’s at 7.5% now – showing that not only are we leaving many people out of the picture, we’re leaving far more than usual because of the nature of this Depression.

    Furthermore, the numbers we’re dealing with show this to be a similar Depression to the one from 1893-1902. That took about 9 years to absorb all the workers, and ours is likely to take just as long unless we do something about it. I wrote about some of this here:

    https://erikhare.wordpress.com/2009/11/23/deliverance/

    https://erikhare.wordpress.com/2009/11/09/first-job/

    This is likely to wind up as a “lost decade” if we don’t get serious about job creation. I still think that the basic overhead per employee is the most obvious (and cheapest) place to start looking at the problem.

  5. I am self employed and never get counted when I am unemployed. I am unemployed when I don’t have any listings or any buyers and I am under employed when I don’t have enough business. There are many like me and we will never be counted because we can’t collect unemployment and are always considered employed . . or maybe just invisible?

  6. Thanks, T.

    I stopped counting a long time ago, too. As far as the Oh-fish-eye-al records are, there’s no difference between me having a good month, a bad month, or a totally awful no-work-for-you month. Those of us who make our own way are kind of invisible.

  7. Pingback: and Statistics « Barataria – the work of Erik Hare

  8. Pingback: Great Recession? Great Denial « Barataria – the work of Erik Hare

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