January 07, 2006

Somebody's Glass Is 4.9% Empty

An Anemic Jobs Recovery

In case you are wondering about the title of this post, the unemployment rate fell to 4.9% in December, though the New York Times couldn't find the space to mention this in it's editorial, much less that last month's unemployment numbers were adjusted upward (again) by 100,000.

Responding to yesterday's government report showing paltry job creation in December, Treasury Secretary John Snow urged Americans not to overreact to one month's snapshot, but to focus on the bigger picture. But that picture is not so pretty.

Don't worry America, the NY Times will overreact for you.

In 2005, the economy added about 2 million jobs. At this point in the last recovery, the yearly job-gain total was 3.5 million.

Perhaps because the recession we were recovering from was a little worse. Not to mention Hurrican Katrina and it's aftermath.

The longer view is even uglier. Job growth in the current period is the worst by far of the four comparable economic upturns since the 1960's: 2.7 percent versus the 7.8 percent tallied in the weakest of those earlier recoveries.

This is what is sometimes called lying with statistics. Notice how subtle the switch is from absolute to relative numbers? And why only the last four recoveries? Didn't the fifth and sixth previous recoveries fit the storyline? Exactly how low does the NY Times expect the unemployment rate to go?

It's little wonder, then, that President Bush cherry-picked his way through the latest economic figures in his speech yesterday before the Economic Club of Chicago, rattling off numbers without context. The president's prescription - more tax cuts - has failed in the past to create a robust job market and is still not the right answer.

And the NY Times' vast experience with cherry picking statistics makes them experts at spotting its use. Sour grapes seem to have been replaced with sour cherries. Tax cuts are like the war in Iraq. They both have to be abandoned now before their respective successes become irrefutable -- even to the reality-based community.

For the past two years, average hourly wages and weekly salaries have been flat or falling. Americans' borrowing binge has masked the decline in earning power, but good jobs and rising wages are essential for widespread prosperity. Without them, economic growth has become increasingly concentrated among corporations, shareholders and the top 20 percent or so of earners. The holiday shopping season illustrates this situation: retailers that cater to lower- and middle-income shoppers, like Wal-Mart, Sears and Kohl's had disappointing results, while higher-end chains, like Neiman Marcus and Nordstrom, thrived.

Shades of Fox Butterfield -- it couldn't be that ever more American's have ever more money in their pockets now, could it? And anyway, when did the NY Times suddenly decide that Wal-Mart's success was a good thing?

Posted by Charles Austin at January 7, 2006 11:05 PM