Bernanke: Obama Unemployment Numbers 'Out of Sync'
Declining jobless numbers, sprouting lately from the Obama administration like so many spring crocuses, have left even the Chairman of the Federal Reserve puzzled over figures that are "out of sync" with the overall economy.
"[T]he combination of relatively modest GDP growth with the more substantial improvement in the labor market over the past year is something of a puzzle," Bernanke admitted to the National Association for Business Economics earlier this week.
Bernanke then proceeded to explain why unemployment figures from the administration seem so out of step with the reality most folks are experiencing. He started with a basic, but often overlooked, part of the jobless equation. "The monthly increase in payroll employment, which commands so much public attention, is a net change," he said. "It equals the number of hires during the month less the number of separations (including layoffs, quits, and other separations)[.]"
In other words, the U.S. job market is in a constant state of flux, with people leaving the workforce due to retirement, or being fired, or leaving a job for a better position, etc. Likewise, some of the positions will be refilled, taking a person out of the ranks of the unemployed. These are not jobs created, but replacement hirings. Then Bernanke concluded, "the increase in employment since the end of 2009 has been due to a significant decline in layoffs but only a moderate improvement in hiring."
So, despite the Obamedia's attempt to paint a sunny picture heading into the November election -- note their relative inattention to Bernanke's speech -- very few new jobs are actually being created during Obama's watch. In fact, the most recent numbers from the Bureau of Labor Statistics, cited by Bernanke, show that the number of people being hired has declined in 2012 -- even as Obama officials reported that unemployment figures came down.
The Obama administration was claiming jobless improvement in a job market that, according to non-Obama sources, was still grim. "American employers put the brakes on new jobs in January," according to Forbes, citing employment firm ADP. And Gallup reported in February that their surveys show new hirings dropped and that "[t]he February score matches those recorded from October through December 2011."
As to the unemployment numbers emanating from Obama's regime, Bernanke noted, "the better jobs numbers seem somewhat out of sync with the overall pace of economic expansion," before concluding, "the job market remains quite weak relative to historical norms."
"Importantly, despite the recent improvement, the job market remains far from normal; for example, the number of people working and total hours worked are still significantly below pre-crisis peaks, while the unemployment rate remains well above what most economists judge to be its long-run sustainable level. Of particular concern is the large number of people who have been unemployed for more than six months."
Specifically "out of sync," according to the Fed chairman, were recent unemployment numbers compared to disappointing Gross Domestic Product numbers, with which they should track.
One possibility, the one that we're sure to hear from the media wing of the Democratic Party, is that the disappointing GDP numbers are the result of "statistical noise" and that the economy is actually doing much better than they reflect. Bernanke discounted that notion, pointing out that the GDP reports are consistent with lagging gross domestic income figures, which are built on separate data sets.
Bernanke suggested that the overall labor market has improved somewhat, but that could well be due to employers compensating for overdoing layoffs during the economic downturn:
...perhaps because they feared an even more severe contraction to come or, with credit availability sharply curtailed, they were trying to conserve available cash[.] ... [W]hat we may be seeing now is the flip side of the fear-driven layoffs that occurred during the worst part of the recession, as firms have become sufficiently confident to move their workforces into closer alignment with the expected demand for their products.
But, again, this would represent, not new jobs being created in the overall economy, but existing or previous positions being refilled.
And Bernanke warned:
However, to the extent that the decline in the unemployment rate since last summer has brought unemployment back more into line with the level of aggregate demand, then further significant improvements in unemployment will likely require faster economic growth than we experienced during the past year[.] ...
[T]he recent decline in the unemployment rate may reflect, at least in part, a reversal of the unusually large layoffs that occurred during late 2008 and over 2009. To the extent that this reversal has been completed, further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses[.]
Early in his administration Barack Obama said that job creation was goal Number One. He promised to create 3 million new jobs during his first two years in office, a pledge which would seem laughable if his failure didn't adversely affect so many people. Even with recent improvements in jobless numbers -- caused mainly by a slowing of layoffs -- as Benanke noted, "private payroll employment remains more than 5 million jobs below its previous peak; the jobs shortfall is even larger, of course, when increases in the size of the labor force are taken into account."
Bernanke's speech, about the most pressing problem facing Americans today, was only lightly covered by the media. Much of the coverage that was given it focused on interest rates and how his comments affected the markets, not on the parts of the speech which questioned the Obama regime's 'puzzling' unemployment numbers.
And why would they? It doesn't fit the O-Team's narrative that they are somehow building a, seemingly invisible, roaring economy. But with spiraling 8% real inflation, historically high gas prices, cataclysmic real estate values, and federal debt under Obama more out of control than Charlie Sheen on a Las Vegas weekend, most folks are dubious about the 'recovery' that the Obamedia are trying to convince us we're experiencing.
It's sorta like Barack Obama is telling the American people that old joke: who are you going to believe, me or your lying eyes?
William Tate is an award-winning journalist and author.