Unemployment falls to 7.8% or does it?

Last week the unemployment numbers came out for September and fell from the previous month to 7.8%. The Democrats applauded the numbers as they needed good news after the pathetic showing of President Obama at the first Presidential debate a few night prior. Since those numbers have come out the validity has been raised by former CEO Jack Welch.

On October 5th, CEO Jack Welch tweeted, "Unbelievable jobs numbers..these Chicago guys will do anything..can't debate so change the numbers." The tweet sent the punditry and the White House into a tizzy over the next few days. President Obama, Gibbs, and Axlerod all took turns lambasted Welch for the comments. So let's look at the hard data per the Bureau of Labor Statistics (BLS) reported:

• Unemployment rate dropped to 7.8 percent in September
• Total nonfarm payroll employment rose 114,000
• Number of unemployed is at 12.1 million - decreased by 456,000 in September
• Long-term unemployed was 4.8 million or 40.1 percent of unemployed
• Total employment rose by 873,000 in September
• Employment-population ratio increased by 0.4 percent to 58.7 percent
• Civilian labor force rose by 418,000 
• Labor Force participation rate was 63.6 percent
• Part-time rose to 8.6 million from 8 million

Now none of these numbers are adjusted for seasonal changes. As CEO Welch points out in his op-ed toady in the Wall Street Journal,"The unemployment data reported each month are gathered over a one-week period by census workers, by phone in 70% of the cases, and the rest through home visits. In sum, they try to contact 60,000 households, asking a list of questions and recording the responses." The BLS website confirms the process that Welch alludes to as well. Is anyone else bothered by this? 

Why are we not using payroll information that can be harvested from various payroll servicing companies? That seems to be a better and more accurate look at unemployment. That being said, when President Obama took office there were 233,788,000 people (civilian noninstitutional population) with 154.287,000 considered part of the work force or 62.2%. At the end of 2009, we had 235,801,000 people with 154,142,000 considered part of the work or 65.4%. In 2010 and thus far in 2011 the numbers are respectfully - 237,830,000 people 153,889,000 workforce or 64.7% and 239,618,000 people 153,617,000 workforce or 64.1%. The unemployment rates for 2008, 2009, 2010 and thus far for 2011 are 5.8%, 9.3%, 9.6% and 8.9%. (All data in this paragraph can be found on the BLS website under the table Household Date Annual Averages).

One may ask, "Chris, why are you focusing on this information and not the most recent months data?" That is a great question. I will let Alan Krueger, President Obama's Economic Advisor, who is reported as say back in March of this year, "The monthly employment and unemployment numbers can be volatile, and employment estimates can be subject to substantial revision. Therefore, as the administration always stresses, it is important not to read too much into any one month report" (On jobs, former Obama aid Goolsbee warns against irrational exuberance, March 9, 2012, yahoo news). The monthly reported unemployment numbers for January, February and March of 2012 were 8.3%, 8.3% and 8.2%.

Mr. Goolsbee, President Obama's Economic Advisor prior to Krueger, said in an op-ed in the New York times back in 2003 in response to unemployment numbers reported under President Bush didn't add up by claiming, "the government has cooked the books." The month to month gyrations of the unemployment numbers can be an indicator but looking at data over a period of time gives us a better trend. 

In 2008 we had 79,501,000 people out of the work force and as of today we have 86,001,000. At the same time we have seen the participation rate go from 66% to 64.1%. These are not good trend lines for someone seeking re-election at any level of government let alone the President.

Perhaps Larry Elder and Rep. Emanuel Cleaver, D-Mo. and chairman of the Congressional Black Caucus, are posing the right questions. Mr. Elder penned, "What if President Obama were white?" in his article from October 4, 2012 on www.onenewsnow.com. Or when Rep. Cleaver stated, "As the chair of the Black Caucus, I've got to tell you, we are always hesitant to criticize the President. With 14 percent (black) unemployment, if we had a white president we'd be marching around the White House." The irony is that in April of 2003, Sen. Obama railed against President Bush over high black unemployment and it was only 10.3 percent at that time. President Bush did get black unemployment as low as 7.9 percent during his term in office.

No matter how you slice it, the employment situation in the United States is not better under President Obama. How can we be pleased or how can anyone make 7.8% unemployment rate, not adjusted for seasonal change, a good thing? Especially when we have less people looking for work then we did four years ago. Personally, I say throw out the numbers that are done via a survey of calling people and let's start looking at number based on more concrete data. 

I think Ron Florance, managing director for investments strategy for Wells Fargo Private Bank, sums it up best, "It's a little confusing, to be honest with you. The number of jobs created wasn't that high but the unemployment rate came down and the participation rate went up a little bit, so it's confusing. All in all, it doesn't change the trajectory of what the jobs environment has been really for the last year" (Unemployment rate falls to 7.8% as economy creates 114,000 jobs, October 10, 2012, economywatch.nbcnews.com). 

The Most Transparent President Ever!

While on the campaign trail, Sen. Obama blasted past administrations for allowing special interest groups access to the White House and the lack of transparency too. Interesting that as the Fast and Furious debacle plays out that President Obama would exercise Executive Privilege over information Congress is asking Attorney General Holder to provide.

Then the Wall Street Journal is reporting that David Axelrod's advertising group, which he supposedly cut ties with, was intragal in promoting ObamaCare. American's can only hope that the US Supreme Court strikes down ObamaCare but that still doesn't take away the recent efforts of the White House to cover-up and conceal. Perhaps we are witnessing another Watergate!

Carney: Unemployment Benefits Could Create Up To 1 Million Jobs

Okay, I am not a Wall Street Journal writer so someone help me out. How does extending UE or even giving out UE benefits out create jobs let alone 1 million jobs. For if that were the case wouldn't our unemployment rate be below 8%? When I was laid off I had UE benefits but every cent went toward the house payment. I don't think my mortgage payments allowed Citi to hire more employees but I could be wrong. So again, please, someone let me know how this works and how a Ivy educated man in Obama can think this works.

President Obama addresses the nation as Iraq mission changes

President Obama spoke this evening. Unfortunately, I missed it but here is the link to the full transcript in case you missed it as well: http://www.foxnews.com/politics/2010/08/31/transcript-president-obamas-oval-office-speech-iraq/.

Here are the headlines.

Obama Salutes Bush While Noting 'Huge Price' Paid in Iraq – Fox News.com

Obama: Iraq combat mission 'is over' – MSNBC.com

Obama Declares End to U. S. Iraq Combat – Nytimes.com

'It Is Time To Turn The Page' – Huffington Post.com

Obama marks end of combat in Iraq – Chicago Tribune.com & LA times.com

Obama Marks New Focus in Iraq, at Home – The Wall Street Journal

 

I did catch the tail end of MSNBC wrap up and one may have thought Obama was a Republican by their responses. What did others think of what was said?

President Obama needs to be specific tonight on health care reform

Tonight at 7 P.M. CST President Obama will address a joint session of Congress in an attempt to guide them in developing a health care reform bill for him to sign into law. President Obama wanted Congress to pass health care reform before the August recess for good reason; the message on health care reform is no longer being controlled by the White House. The August recess allowed, those really concerned, to review the House bill and get an opportunity to participate in town hall meetings. While not every member of Congress held open forums, they did hold meetings of some sort to hear from constituents on the issue of health care. No one denies, okay maybe one person, that health care costs are growing out of control and reform is needed. The disagreement is how much reform is required to bend the cost curve downward.

The "Gang of Six" is trying to hammer out an idea. The Republicans have a proposal but are unable to get it out of committee or get it scored by the CBO. Republicans do not want to release the plan before it can be scored by the CBO which is politics. I have had the opportunity this summer to witness first hand a number of C-SPAN session of Congress and can attest to Republicans ideas are not given real consideration in committees. The Liberal Left members of the Democrat party have drawn the line in the sand that if reform does not include a public option then they will not vote for reform. The Conservative Right is dead set against the public option and it appears many "Blue" dog Democrats are as well. President Obama campaign on bringing people together; yet he cannot find common ground with members of Congress without creating uproar from the base of the Democrat party.

Thus far the President has touted that "if you like your health care you will be able to keep it." Unfortunately his rhetoric does not match what is being done in Congress which is not a bad thing since there is suppose to be separation of powers. Then again, it his party that is in power and one would think they'd be on the same page. The current HR 3200 bill penalizes companies if they do not offer insurance equal to what the public option will offer. A bit of hypocrisy presents itself here. People in general are happy with the coverage but are unhappy at the rising cost of being covered. Why do we need to penalize companies if people are happy with their insurance cover? Let's not confuse the issue though.

I find it interesting that during the campaign and after taking office President Obama looked to places like Canada and England health care systems as models his administration would emulate. Recently President Obama said, "I've said that the Canadian model works for Canada. It would not work for the United States, in part simply because we've evolved differently. So, we've got to develop a uniquely American approach to this problem" (NYtimes.com). A "uniquely American" approach does not restrict freedom of choice or look to the government for the answer; rather free market ideals are what make our current system a "Uniquely American" approach.

The trouble with the current system is that the free market concept of competition is confined by state borders. By deregulating the health care system to allow one in Minnesota to purchase health care coverage from an insurer in Arizona will increase competition thus reducing costs. If the primary goal is to reduce costs then why not start reforming health care by doing this? America's deficit is spiraling out of control and opening up competition does not cost taxpayers any money; Budget neutral!!!!!

Back in June I was challenged by one of my progressive friends to provide an outline for health care reform which I did in my blog entry, Outline of Health Care and Tax Reform, on June 10, 2009. I recognize that my idea of health care reform does not provide all the answers but it does provide a solid base of ideas that would be budget neutral. One aspect that I neglected in my blog entry back in June was to include tort reform. Without solid tort reform the cost curve will not trend downward.

I am hoping that tonight President Obama will lay out specific plans or changes to current bills of health care reform. The time for lofty rhetoric has past; the time for specific language is required. Without specifics the American public fears will only be heightened. According to Scott Rasmussen, "those opposed to Mr. Obama's reform appear to have momentum on their side. Polling last weekend showed that 48% of voters rate the U.S. health-care system as good or excellent. That's up from 35% in May and up from 29% a year ago. Only 19% now rate the system as poor, down from 37% a year ago. It appears that the prospect of changing health care has made the existing system look better to a lot of people" (Wall Street Journal).

The sliding poll numbers are even more reason why President Obama needs to get specific on health care reform and display how the reform will benefit all Americans. I am one of the 48M uninsured in America right now and it is by choice. Because unemployment is just a portion of my previous income level the cost of health care increases but not due to an increase in cost rather due to the decrease in income. Now there are options for health care coverage that is less expensive and affordable than COBRA or any of those offered in Minnesota but I cannot take advantage of that because the coverage is in another state. I look forward to the speech tonight and hope that President Obama can produce on his campaign promise for health care reform that allows those with coverage to keep their coverage for as long as they are employed at their current employer.

Rep. Frank at it again....

Here we go again. Rep. Barney Frank (D-MA) is at it again. This time Rep. Frank is asking Fannie Mae and Freddie Mac to “make appropriate adjustments” in regard to mortgage guarantee’s for condos. Currently, Freddie Mac and Fannie Mae are “no longer guarantee mortgages on condos in buildings where fewer than 70 percent of the units have been sold” according to a Reuters report (Fannie, Freddie asked to relax condo loan rules: report) Reuters also reports, in the same article, that “Fannie Mae will also not purchase mortgages in buildings where 15 percent of owners are delinquent on condo association dues or where one owner has more than 10 percent of units.”

The Wall Street Journal in an article Barney the Underwriter echoes Reuters report with “After two years of telling us how lax lending standards drove up the market and led to loans that should never have been made, Mr. Frank wants Fannie and Freddie to take more risk in condo developments with high percentages of unsold units, high delinquency rates or high concentrations of ownership within the development.” Does this make sense? Isn’t this how America got into a recession? Can America afford a second housing bubble as many predict is about to occur?

If America cannot then why in the world do we want to lax lending practices anywhere? Common sense and learning from history is not taking place here. Rep. Frank does wield a lot of power in Washington evident by his ability to take a parts dealership off the chopping block, when GM and Chrysler were deciding to scale back operations, in his home district.

Rep. Frank was on O’Reilly Factor last night. Last time Rep. Frank showed up on O’Reilly Factor the conversation ended in a shouting match and didn’t accomplish much. While they talked on an array of topics with one of them being Rep. Frank’s request to lax lending practices. O’Reilly challenged Rep. Frank to defend the Wall Street Journal report that he is looking to lax rules on condo mortgages. Rep. Frank response was, “with the condiminiums we are not talking about sub-prime or poor people. We do have this problem in cities with vacant properties causing serious problems to the cities. What I want is to say his heres the rule, they have a rule that they will not finance a condiminium unless 70 percent of the units in the building is already sold; I am not talking at all if that borrower can pay for them. They should not allow any borrower who cannot pay for it to do it. But I think they have a fisious cycle. If you won’t fund anybody until its 70 percent it will never by 70 percent and you have a serious problem with cities and vacant properties.” Rep. Frank also claimed that he “was opposed to the sub-prime mortgages”.

Really, that is why in 2000 Rep. Frank quipped, in response to a report that Freddie and Fannie may be insolvent because of the guaranteed sub-prime loans, “no federal liability there whatsoever.” Than in 2003 when President Bush pushed for reform after Fannie and Freddie inflated earnings report by $10.6B, Rep. Frank quipped, “Fannie Mae and Freddie Mac are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

Now that brings us back to the topic at hand. Rep. Frank feels, as he said on the O’Reilly Factor, that unless something is done to assist condominium developments with less than 70 percent units sold we will “have serious problems with cities and vacant properties.” Perhaps it’s the current housing market that has seen an increase in the number of homes for sale. According to Realestateabc.com, the inventory of homes on the market “rose to 3.97million units, an 8.8 percent increase from the 3.737 million in March.” That being said, if not offering lower rates (subprime) how else does Rep. Frank see condiminium developers filling the remaining 30 + percent vacancy rate that Freddie and Fannie are refusing to offer loans to?