At first glance the jobs report for August looks promising, but once you delve into the details you realize they are nothing to be happy about.
The only reason the U3 unemployment rate – the rate for those unemployed collecting benefits – has fallen to 7.3% has to do with the large number of people, over 300,000, dropping off the unemployment roles as their benefits have expired or have just given up and not because of people finding jobs. The U6 unemployment rate – the rate for all unemployed whether they are collecting benefits or not – hovers just under 15%. As one pundit put it, “Our drop from 8.1% unemployment to 7.3% is analogous to losing 20 pounds by cutting off a body part.” Only 176,000 new jobs were created, nowhere near what is needed to keep the actual unemployment rate steady. (The figure I seen again and again is that the economy needs to add 310,000 jobs every month just to break even. We haven't seen that number in years, so how is it the government can claim the unemployment rate is going down?)
With this latest report our country has reached the lowest labor participation rate since 1978. I can believe it as I remember 1978 all too well. The economy was stumbling along with high inflation, stagnant wages, and a chronic unemployment problem that the government did everything it could to make it worse and succeeded. Taxes were high and getting higher and entire industries were abandoning high tax states in search of greener pastures. (The punchline to the joke that was the People's Republic of Taxachusetts back then was “Would the last person leaving the Pay State please turn off the lights?”) It was during this period that the heavily industrialized portions of the US became less so and later became the so-called Rust Belt.
Reading the comments to various opinion pieces and articles in the New York Times and the Washington Post it is apparent there are still a lot of economically illiterate out there who believe Obama has saved us and our economy and that only the “obstructionist Republicans” in Congress are to blame, choosing to ignore that the obstructionists reside in the US Senate and are personified by Senate Majority Leader Harry Reid. (I could go on and on about that, but I have addresses that particular issue again and again and feel no need to do it yet again.)
If we continue on this path our economy will go the way of so many others in Europe and we could find ourselves in a decades long malaise not unlike that seen in Japan. And we'll have Obama to thank for it.