Taking Turns With The B(L)S

This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.

The worst aspect of this economy is by far the real effects pressed upon especially American workers. Of that there is no doubt, including young adults who would be working rather than “studying” if the economy was at all like it has been described. The second worst part is watching politicians trade their descriptions for whomever occupies the White House. It does nothing to advance the cause of the American worker (or the global economy for that matter).

In early 2015, within the recent shadows of the BEA’s Q4 2014 GDP report that estimated growth that quarter of better than 5%, Republicans were more and more criticized for their economic criticism. The left-leaning Washington Post in February 2015 wrote:

A robust economy marked by a boom in jobs and a plunge in gas prices is threatening the longtime Republican strategy of criticizing President Obama for holding back growth and hiring, forcing the GOP to overhaul its messaging at the beginnings of a presidential campaign…


The improvement may mark a turning point in the nation’s seven-year-long debate over the state of the economy. Obama came to office amid a financial crisis, promising to turn the economy around. Republicans repeatedly — and, in the 2014 midterm campaign, successfully — argued that he had fallen short, with an economy suffering slow growth and unnecessarily high unemployment.

Long before Bernie Sanders would point out the deficiencies within the unemployment rate’s denominator, Republicans used to highlight the BLS figures for those officially out of the workforce. That typically led to what the Leftist DailyBeast website claimed a month before the Post, “For years Republicans have been spewing doomsday rhetoric, but the stock market is booming, the deficit shrinking, and the economy is adding lots of jobs.”

Candidate Trump even made a point of agreeing with Senator Sanders’ frustrations about the employment problem in the US. The Washington Post earlier this year correctly tallied the 19 times between September 2012 and December 2016 the eventual President called the unemployment rate, and therefore the recovery by implication, fake or false. Among those included this statement just days before the election last November:

The terrible jobs report that just came out … you can see phony numbers, 5 percent.

Democrats cheered the stock market and payroll reports while Republicans pointed out legitimate and overriding flaws in both. The tables have now turned. Here’s what the Washington Post now says about the Dow Jones:

Trump is right. The stock market is doing very well. But many — if not most — people of color in the United States aren’t benefiting from what Trump points to as proof of a thriving economy.


A little less than half of the country — 46 percent — owns stock, either through retirement accounts and other funds or directly. And most of those people are not minorities…


Even among those who own stocks, regardless of race, there’s great inequality preventing most Americans from experiencing the prosperity Trump described.

And here’s where Republicans largely have drifted as to the payroll reports:

However you ever look at it we’ve created a lot of new jobs, we may hit 2 million for the calendar year, we’ll probably be just under 2 million for the calendar year.

That’s Labor Secretary Alexander Acosta’s sudden embrace of the BLS, predictably cheery about what’s expected to be “the lowest unemployment rate since the 60s” next year. It was phony last year but now it’s unassailable progress?

Of course not. Politics isn’t the art of the possible anymore, it’s the distorting of everything to make whoever’s in the Executive office look as good as possible. Two million new jobs in 2017 on the surface sounds terrific, but it’s not; it’s unambiguously terrible, about half of what would be solid, just as it was in 2014 when there were more jobs (according to the BLS) created in that particular calendar year.

Though it will be described as the best jobs market in decades, the truth is that it continues to be the worst no matter which party holds the government.

As of the last payroll report, the BLS figures that the labor market has grown in each and every month since September 2010 (the month QE2 was announced). At 86 months, that is purported to be a record for expansion in US economic history. It sounds very impressive, as if the length of advance is at all important next to the scale.

If we compare, however, the last 86 months with any other 86-month stretch including those from the 1970’s we see that it doesn’t matter at all how long the jobs market is growing. What does is the rate of expansion during those months.

Consider that from 1970 to 1978, the labor market (in appropriate percentage terms) back then vastly outperformed the current one even though there was a nasty, severe recession right smack in the middle of that time period rudely, seriously interrupting that expansion. And that wasn’t exactly taking place during a banner economic trend in American history. The Great Inflation was far better for employment including recessions than what’s being called today varying shades of booming without another one.

And it doesn’t matter where you start your comparison; above I’ve begun the 86 months starting at the bottom of the 1973-75 recession. This time, it ends in the middle of an even worse economic contraction in 1982, where despite the serious double dips of the early 1980’s taking up the final two years of that period it still significantly outdistances this “record” expansion of the 2010’s. Candidate Trump was right; it’s all fake.

What Secretary Acosta should have said was more along the lines of Republicans’ previous criticisms. “The labor market made some progress this year but it was far short of what is required to get American labor back on track and moving toward the actually healthy and robust economy we promised during the campaign.” That sort of honesty could have allowed (or not) politicians of both parties to come around to a more forthright assessment of the current predicament, instead of each one taking turns denying that we are deep inside of one and getting deeper by the year.

This is, sadly, after ten years still Step 1. They have to first agree that the economy is bad, was bad, and is in all likelihood going to stay that way. That sort of frank assessment has to happen before anyone can really go about figuring a solution to it, let alone implementing it. If you won’t admit there is a problem, or if you won’t admit it while your guy is in the White House, you’re never going to be amenable to fixing what you can’t ever claim is broke.

It’s not a specific failing of one party or the other, it’s a character flaw of both sides brought on by modern politics. It’s the very one the Fed exploits so as to be unaccountable for anything and everything. There is a reason why especially populist dissatisfaction has tended to take on anti-establishment or anti-elitist proportions. 

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