The Economic Recovery: A Myth Built Upon a Myth
No matter how much data you point to showing the health of the US economy isn’t as good as advertised, you will inevitably hear the refrain, “But look at the jobs numbers!”
Just the other day, Peter Schiff appeared on Fox Business and said the US economy is likely already in recession. Peter repeated his prediction that the Fed wasn’t going to raise rates again, but would instead drop them to zero. National Alliance Securities Global strategist Andy Brenner was having none of that. He insisted the Fed would raise rates at least two more times this year because the economy is doing OK. And what was his proof? You guessed it – jobs!
Peter made mincemeat out of Brenner’s argument, pointing out that most of the new jobs in the February report were part-time and low paying.
Eighty percent of these jobs are service-sector jobs, many of them are minimum wage jobs. You can’t raise a family on these jobs. Many kids can’t even move out of their parents’ houses because they can’t get a job.”
But what of the bigger picture? What do we make of the Obama administration’s contention that the economy has added millions of jobs since the last recession? How does this claim stack up to reality?
As it turns out, not very well. Ryan McMaken exposes the fact that all of this boasting about jobs is nothing but myth in a recent article at the Mises Institute.
He starts by citing an appearance by David Stockman on Bloomberg TV:
In the course of the interview…one of the Bloomberg commentators returned to well-worn bullet points and claimed ‘we’ve created, like, millions of jobs’ since the last recession.’ Stockman’s response was ‘no we haven’t’ and he went on to note that ‘if we look at real jobs, at full time jobs, there are no more today than in December .’ Stockman also pointed out that many of those jobs were simply replacing what was lost during the recession. Naturally, Stockman realizes that if you’re going to measure progress in jobs growth, you have to measure from the peak of the previous business cycle, and not from the bottom of the most recent trough.”
McMaken then digs into the numbers. He concedes that there are 2.7 million more jobs today than there were in November, 2007. But what does this mean in context?
First, you have to consider that the numbers reflect “jobs” not employed persons. If one person works two part-time jobs, it will show up in the data as two jobs:
So, if we live in an economy where a large number of people have two jobs in order to make ends meet, we might see jobs increasing while employed persons remain stagnant. Thus, when one refers to millions of jobs using this survey, we know immediately that this could also include part time positions without benefits, and it does not necessarily mean that millions of people have those jobs.”
Second, you have to put those 2.7 million jobs in context. When we do that, it looks much less impressive, as McMaken shows:
It’s technically true that this is ‘millions’ of jobs, although by historical standards, it’s not much to crow about. If we compare to previous cycles, we find that the current cycle has the lowest job growth rate in nearly 35 years…Comparing peak to peak, we find that the recoveries of the 1980s and 1990s were far stronger in terms of jobs growth. Those 2.5 million jobs created represent some of the weakest jobs growth we’ve seen in decades.”
McMaken goes on to dig deeper into the data, showing that the number of actual employed persons remains stagnant, and he verifies Peter’s contention that many of the jobs are part-time, low-paying, and come with no benefits.
Whether you look at the most recent report or the long-term trends, by disregarding the headlines and digging below the surface, you will find the jobs numbers tell us one thing – the robust recovery that Obama and all of his apologists keep telling us about is a myth built upon a myth.
This post is part of our ongoing series Data Dependent: Reading Between the Lines, where we examine the real economic data not reported in the financial media. Click here to read all our articles in this series.
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