The Dummies' Guide to Stupid Leaders and Misleading Numbers

In case you didn't know, the loss of 20,000 American jobs in April is actually good news. You see, economists had predicted 73,000 jobs would be lost last month, so thank God we dodged that bullet, right?!

In fact, the unemployment rate fell to 5.0% from 5.1% in March. Therefore, the unemployment rate is going down!! Surely, a .1% drop in the unemployment rate means America's determined locomotive is chugging toward the dawn of a new economic renaissance...right?

These kinds of figures can mislead citizens, particularly when delivered in sound bites by an ignorantly defiant leader. Let's first consider the possibility that less people are losing jobs because so many people are already unemployed. People can't lose jobs they don't have, and I know very few people that have been laid off the same job twice. These kind of polls also rarely consider the underemployed, who are in as much danger of bankruptcy as unemployed citizens due to medical bills.

Finally, the government doesn't count everyone who is unemployed. Only people who are actively looking for employment are considered unemployed.

Contrary to the philosophy of Reagan Republicans, these unemployed-and-not-looking citizens aren't all welfare queens. They're also spouses, veterans, the disabled, and the retired, all of who have nothing in common other than being screwed by the Bush administration. The "unemployed-and-not-looking" also includes the independently wealthy. Yes, believe it or not, some rich people refuse to contribute to the work force. What do we call those people -- Trust Fund Queens?

During his weekly radio address President Bush declared, "We saw the economic slowdown coming, we were up front about these concerns with the American people, and we've been taking decisive action."

For a moment, let's take Dubya at his word. He saw the slow-down coming. Why then did he spend two terms in the White House providing huge corporations tax breaks in the form of Corporate Welfare, while slashing social spending? A competent leader surveys a bad situation and acts to fix it. Dubya surveys the same situation, kicks it in the balls, and then hides behind Ben Bernanke, while snickering. It just doesn't make sense.

Back to Dubya's radio address. Let us overlook his own words, and this particular exchange with a reporter way back on September 20, 2007:

QUESTION: Do you think there's a risk of a recession? How do you rate that?

BUSH: You know, you need to talk to economists. I think I got a B in Econ 101. I got an A, however, in keeping taxes low and being fiscally responsible with the people's money.

I'll let it pass that Dubya's a douche bag, a condescending, spoiled brat who is more preoccupied with preserving D.C. cronyism than protecting American citizens' interests. But what I won't let slide is how he has treated the American people like children when he dressed up a recession in a clown suit and called it a "slow down." In this regard, President Bush and his sterling troop of economists have executed nothing resembling "decisive action." They have spent their time in denial and casting blame everywhere but at their own failed policies. They certainly have done nothing to fix the economy.

Unless, of course, you count forcing a shotgun wedding with JPMorgan and Bear Stearns with $236 million of taxpayer money. Personally, I see that as the rich protecting the wealth, but I've been called paranoid and moody in the past.

But I know when I'm beat, so if protecting rich people is decisive action, then yes, George W. Bush is the most decisive president in the history of the United States. Call him "the Decisiver." Tell him it's a real word. He'll believe you.

Dubya has been super to the rich, but lousy to everyone else. According to the Center for American Progress, since the Great Depression, Dubya is the only president (serving at least 52 months) who has overseen a net loss in the private sector. He has slashed funding for education, veterans' health care, law enforcement, and environmental protections. Dubya has repeatedly raised the ceiling on our national debt time, and at this rate the debt is on track to reach the $6.5 trillion mark by 2011, according to the Washington Post..

The economy is in the tank and most Americans feel the strain. They don't need pundits or politicians to tell them they're paying more at the pump and grocery store. Hopefully, citizens won't buy into the ridiculous belief that 20,000 lost jobs is a good thing -- a sunny turnaround -- a surge, if you will. The economy, like the war, is toast.

The first step of recovery is recognizing that there is a problem. Americans need to demand solutions from their leaders. The only way to fix the economy is to elect competent leaders to pull Americans out of this country-sized grave.

Comments

[legalgirl]

Note to Obama: First thing, suspend the trading oil futures immediately

[rwe2late]

The "POLLYANNA CREEP" in government economic reports --------
It"s much worse than most realize, as the following quotes indicate:

Indeed, it may already be showing up there; the seasonally unadjusted consumer price
index for March was up 0.9% (an annual rate of around 11%) and only a heroic seasonal
adjustment of 0.6%, DOUBLE THE NEXT-LARGEST SEASONAL ADJUSTMENT for
any month in the last 10 years, brought the figure down to an acceptable 0.3%.
http://www.atimes.com/atimes/Global_Economy/JE07Dj02.html


The article goes into such frauds as "imputed income" (such as the "value" you receive
from living in your own home, or the "value" of your free checking account), the total of
which Mr Williams calculates was 15% of total GDP in 2007! Wow! "Imputed income"
was 15% of GDP?
...
Then, finally, we get to how magically to reduce inflation with "product substitution" in
the consumer's shopping basket ("if flank steak gets too expensive, people are assumed to
shift to hamburger, ..., the inflation-reducing scam of "geometric weighting" of the items
still in the shopping basket ("goods and services in which costs are rising most rapidly get
a lower weighting for a presumed reduction in consumption"), and concluding with the
infamous "hedonic adjustment", (which even the author says is "an unusual computation
by which additional quality is attributed to a product or service").
http://www.atimes.com/atimes/Global_Economy/JE07Dj01.html

[fishsandwichesr2good]

Allison, W may be a douche bag, but you are clearly an ignorant slut.

[weavermiami]

I just got my $600 stimulus check!! Awesome, thanks W. Oh, wait, my cat got sick last week and had to have unexpected surgery on Thursday. Surgery + 3 days in hospital: $1018. Four visits to vet leading up to surgery: $800. I've already given up going to the movies, eating out, buying national brand grocery items, buying clothes, driving to work, birthday gifts, medications....

[Photofarm]

Gee, the smart thing would be to put the cat to sleep, and get another one instead of spending so much money on the cat. mmmmmmmm good example of poor choice by you, and only you.

[fishsandwichesr2good]

One swing of a shovel would have taken care of your cat problem weavy. I'd a done it for free.

[Robert59]

Well, if you didn't own a cat you'd be 600 ahead (just kidding, but I couldn't resist). I know how attached people are to their pets, but it's something I've never understood.

[WretchedEtcher]

Plus, that $600 was borrowed from China.

[Photofarm]

First law of economics, politicians can't make a utopia.

Second law of economics, given choices, it is amazing how people can adapt and change and make things better, if politicians don't put too many rules on them.

Third law of economics, politicians running for office always say the economy is worse than it is when they are out of office and trying to get in power.

[Robert59]

Those aren't the laws of economics, but Photofarm's laws of economics. The natural laws of economics are:

by Fred E. Foldvary, Senior Editor
A natural law is a proposition that is universal to a subject matter. In science, a natural law consists of propositions describing and explaining observed regularities. There are in economics some basic regularities which have been designated as natural laws of economics. These include:

1. The law of demand.
2. The law of supply.
3. The law of diminishing returns (law of decreasing marginal productivity).
4. The law of one price.
5. Gresham's law.
6. The law of reflux.
7. Law of supply and demand.
8. The law of diminishing marginal utility.
9. The law of unintended consequences.
10. The law of iterated expectations.
11. Engel's law.
12. Wagner's law.
13. Foldvary's law of inequality. .
14. Say's law of markets.
15. Law of time preference. 16. Law of the market.
17. Pareto's law of distribution.
18. Law of cost.
19. Law of comparative advantage. 20. The law of wages.
21. The law of rent.
22. The law of capital goods.
23. Walras' law.
24. The law of economizing.
25. The law of economic rationality.
26. The Gaffney effect.

[Photofarm]

Yawn, bet you don't even know what half of the rules you site mean.

Besides, the ones I listed are included in your list, I just gave them a realistic name.

[Robert59]

Of course the biggest point I saved for last. Basically NBER is using apples to determine a recession when economists use oranges.

Finally, the NBER does not use the mechanical rule of two consecutive quarters of negative GDP growth in determining whether we had a recession or not. The NBER looks at a variety of economic indicators and puts more emphasis " among other variables " on employment and labor market conditions. We do know that employment in the private sector has now fallen for four months in a row and that overall non-farm employment (including the government employment) has fallen for three months in a row. So I do expect, leaving aside possible future downward revisions in the Q1 figures, that the NBER will eventually date the beginning of the 2008 recession to the first quarter of 2008.

[Robert59]

Fourth, fifth, and sixth points he makes

Fourth, since the quarterly GDP figure compare the average GDP in the first three months of 2008 to the average GDP in the last month of 2007 even a flat or slightly falling GDP in some months of Q1 is consistent with the average being positive relative to the previous quarter (that is the average of three growing months). And data on monthly GDP (say from Macro Advisers) show that GDP started to fall in February of 2008. This is the typical inertia in growth figures that comes from looking at quarterly, rather than monthly, figure. Thus, the Q2 GDP contraction will be larger than otherwise.


Fifth, both durables goods consumption and non durable goods consumption grew at a negative rate in Q1. What boosted an anemic 1% growth in Q1 consumption was a still positive growth in services consumption. Durable consumption spending is clearly collapsing (-6.1%) But the fact that spending on non durable goods is falling " something that has not happened in decades " is an ominous sign.


Sixth, the only good news on growth came from net exports. But with sharply rising oil prices in the last few months you are going to see a sharp rise in imports of oil and energy goods in Q2 that will further depress Q2 growth.

[Robert59]

Next he talks about investment

Third, now all components of fixed investment (residential investment, non-residential investment in structures and capex spending by the corporate sector (i.e. non residential investment in software and equipment) are now in negative growth territory. This is a major difference relative to 2007 when structures investment and capex spending were significantly positive. The investment recession is now clearly spreading from housing to non residential commercial real estate and to real capital spending by the corporate sector.

[Robert59]

Then he talks about housing

Second, residential investment is in total free fall, collapsing at an accelerating annual rate of 26.7%. But GDP figures underestimate the true fall in aggregate demand as they do not separate residential investment into true final sales of new homes and into the unsold inventory of new homes that are produced and not sold. Thus, all production of new homes is assumed to be sold in the national income accounts data. But we know that home sales are falling more than production of new homes, that cancellation rates (running at a rate of 20-30%) are not included in the new home sales figures and that the inventory of unsold new homes is actually rising. Thus, if the BEA had correctly measured final sales of domestic product, by having a separate line for the change in the inventories of new unsold homes (the equivalent of the change in business inventories), the figure for final sales of domestic product would have been even more negative than the already negative 0.2%, probably a negative 1.0%. So the national accounts make a methodological mistake in measuring final sales of domestic product by assuming that the change in inventories of unsold housing is always zero, something that is obviously wrong especially during a severe housing recession.

[Robert59]

Got this from economist Nouriel Roubini's website

Apr 30, 2008
The official headline for U.S. Q1 GDP growth says a positive 0.6% growth but the details are ugly and confirm that we are in a recession.


First of all, if you exclude the increase of inventory of unsold goods (that moved positive after a negative figure in Q4) the Final Sales of Domestic Product were a negative 0.2%. In other terms, inventories of unsold goods added an artificial 0.8% to Q1 growth boosting it from a negative 0.2% to a positive 0.6%. So actual aggregate demand (Final Sales of Domestic Product) " the actual measure of growth of true demand - fell in Q1. And this build-up of inventories in Q1 means that the fall in GDP in Q2 will be larger than otherwise as firms will have to reduce that large inventory of unsold goods via a further reduction in production and employment.

[elpollo]

Robert59, you left out the most important factor vis-a-vis the BLS (Bureau of Lying Statistics). The 0.6% positive growth is based on an inflation rate of 2.6%. The real inflation rate, even with the price of residential housing plummeting, is at least double that, putting the GDP in major negative numbers.

[Robert59]

Well, my feathered friend. The economist I quoted, not I, left it out. I need to do some researching to see how inflation factors into GDP calculations. I would think it has to be a part of the equation, but if it's factored into the value of the what's been produced I'm not sure it strengthens your argument or weakens it.

Either way, I've thought the same thing and also wonder how the official inflation rate never made any sense.

Su gallo calzonazos

[researcher]

maybe just maybe when the economy is toast we will give up our imperialism. it will take a force like a economic depression may end our war mongering for profits.

karma is doing its thing. the atheists dont see karma as a reality and the religious are too self rightous to see it.

listen carefully to rev wright many of his words are right on track but his way of presenting them misses the mark. hate and ego have overwhelmed him.

the chickens are truly coming home to roost. maybe we americans are willing someday to give up our victim status. but dont count on it.

jesus said it best what we sow we reap. reap time in america.

[Robert59]

There's a few things Wright said I found difficult to swallow (government creating AIDS, blacks learning differently than whites which sounds to me like he's blaming teachers instead of parents for Johnny being unable to read, or lumping all whites into the slave owner category when most Europeans didn't even set foot in this country until after the civil war).

All that said he is right when he says the chickens have come home to roost. If you think our energy, trade, and even domestic policies are linked to our foreign policy it's obvious he is onto something.

We support governments all over the world who deny their citizens the freedoms we have and undermine those who do, and it's all done to fatten the wallets of multinational corporations who haver ZERO allegiance to this country or what it stands for.

[tc399]

Dang, I like the way this kid (compared to me) writes. I read a previous article and was waiting for one more and I have just become a fan. Call it like it is and no one can ever beat you.

Allison, I hope you jump into politics. Soon. A few thousand more young, honest, brilliant leaders who aren't afraid to tell the truth and Obama CAN turn the country around.

[jsarets]

In the Ownership Society, anyone who can't find a job is given the option of enlistment or imprisonment.

[BlueAsh]

As long as you are on the subject, why don't you suggest some ways for us to understand this business of "negative growth." Some people likes to see "growth," and don't mind the negative kind.

[LouisPWu]

Petroleum costs keep going up, meaning everything that is brought to your neighborhood store by truck or rail is going to cost more. The dollar keeps losing value, so the cost of a barrel of crude oil keeps going up. Companies are being hit with higher costs for everything, so they're cutting corners anywhere they can, especially in personnel. People without jobs are buying only what that must, so companies that sell items that aren't absolutely necessary are feeling the pinch and cutting corners, so they're laying people off - who won't have jobs, and income, so they won't be buying stuff.... Oh, my... The recession is upon us, but it's going to get a lot worse before it gets better.