The Big Drop In This Morning's Jobless Claims Was Due To 4th Of July

Two years ago, on the 22nd of July, I wrote this:  

It Was All Because Of A National Holiday, Stupid!

As I had predicted three weeks ago, the jobless claims would fall following the three-day, Fourth-of-July holiday. Also as predicted, the economists would be shocked (as in the case this morning) when the jobless claims jumped significantly to be greater than expected (Click here to See Story: Jobless claims rise more than expected last week). Actually, the claims number jumped to 464,000 from the "expected" consensus of only 445,000. And that number was markedly higher than last week's reported 427,000.

Well, this morning the jobless claims fell by a shocking 26,000 claims.  And, of course, the experts seemed to be grasping at straws, like fewer auto plant closures, to explain the drop.  But, as I had indicated in the headline of my July 22, 2010 blog entry: "It Was All Because Of A National Holiday, Stupid!"  And just like 2010, you can expect the jobless claims to rise again to their usual lousy levels.

Story on the claims drop: http://www.businessweek.com/news/2012-07-12/jobless-claims-in-u-dot-s-dot-plunge-as-fewer-auto-plants-shut-down

And So, The Jobless Claims Games Continue

Yesterday morning, the news media was shocked and dismayed to see that first-time claims for unemployment insurance rose to a 4-month high at 380,000.

Just three weeks ago the claims number was reported to be 348,000 -- a four-year low -- and the left-wing news media was doing victory laps for Obama.  The always left-wing LA Times wrote: "New claims for unemployment benefits fell again last week to 348,000, a new four-year low as the economic recovery continues to accelerate."  But, what most people don't seem to realize is that the very next week that 348,000 number was corrected upwards to 368,500.  Not exactly a four-year low anymore. And, certainly not an economy that the Times claimed was accelerating.

While it is obvious that we are much better off than last year when claims consistently remained above the 400,000 mark, this economy is not roaring back.  But, in an election year, expect the news media to nuance everything to help Obama out.  In fact, this morning's terrible claims number is being tamped down by opinion writers and reporters finding every possible excuse for it.  Some idiots even blamed the number on  the Easter holiday.  The silliness of that argument is that any holiday usually results in an abnormally lower claims number because the unemployment offices are typically closed for at least one day and people are out of town and unable to file. If anything, the 380,000 might be understated and subject to an upward revision next week.  Something that the Obama Labor Department has consistently done for the last three years.  That's why, almost every week, the news headlines will read something like: "Jobless Claims Fall Again."   But, in fact, the "Fall" is always due to a revision upwards of the prior week's number; a game that continually results in better headlines for the President.  In reality, the claims number is merely running in place.

Verizon Strike Blamed For Jump In Jobless Claims?

This morning, the jobless claims number for the week rose to 417,000. This was substantially higher than the consensus projection of only 400,000.

Now, if you read all the "media" reports with regard to this "unexpected" jump, you would get the impression that it was "all" due to striking Verizon workers filing for unemployment; even though those workers are ineligible for any unemployment benefits (Click here to See the CNN Story: Verizon workers filed thousands of unemployment claims). Similarly, CNBC's headline for the job's story stated: "Weekly Claims Above Key Mark Thanks to Verizon Strike". Then, USA Today captioned their version of the story: "Verizon strikers inflate weekly unemployment numbers".

The Verizon story is a clear deception being floated by the Obama Administration and all too happily carried forth by the mainstream media. Even if you back out the supposed 8,500 striking workers who erroneously filed for jobless benefits, the adjusted number would still be 8,500 claims higher than the consensus estimate of 400,000; and, that's the story that the "Verizon headlines" are intentionally trying to hide. Once again, the mainstream media comes to the aid of Obama. They know that many Americans are simply headline readers and not interested in digging down into the weeds to figure out what's really going on.

It Was All Because Of A National Holiday, Stupid!

As I had predicted three weeks ago, the jobless claims would fall following the three-day, Fourth-of-July holiday. Also as predicted, the economists would be shocked (as in the case this morning) when the jobless claims jumped significantly to be greater than expected (Click here to See Story: Jobless claims rise more than expected last week). Actually, the claims number jumped to 464,000 from the "expected" consensus of only 445,000. And that number was markedly higher than last week's reported 427,000.

On the political left, last week's number saw jubilation over the fact that the jobless claims fell to a two-year low; and, finally, there was some hope that the Stimulus Package was actually working. However, theirs was their own stupidity in coming to that conclusion without looking at the context which actually spawned last week's unrealistically low number. But, what else would you expect from a bunch of politicians who are totally clueless when it comes to the "how's and why's" of job creation and job losses.

Going forward, I would expect the claims numbers to get even worse with the weekly jobless numbers coming in closer to 500,000 claimants for each of the next 3 or 4 weeks. This will be a direct result of all the census workers being let go from their intentionally temporary jobs. I'm not sure, but my guess is that this fact will again shock all those prognosticators. As a result, we will probably see another set of media headlines that read: "Jobless Claims Jump Higher Than Expected!"

Let's be realistic. Do we ever really see numbers that come in "as expected"?

Expect A Better Than Expected Weekly Jobless Claims Number

Economists are expecting that Thursday's unemployment insurance claims number will show about 465,000 new claimants. This is in contrast to last week's 472,000 initial claims.

But this week is a short work week due to the July 4th three-day holiday. The unemployment offices were closed for the official holiday and, logically, unable to process a full week's load. So, don't be surprised if the number is "unexpectedly" lower than what the economists are predicting. If I am right, it just proves how incapable these supposed experts are in taking all factors into account before coming up with their estimates.

The same thing happened back in January following the 2009, year-end holidays (Click here to See Story: Jobless Claims in U.S. Unexpectedly Rise on Backlog (Update2) ). Although, the effect of this week's backlog won't be as great as last January's, it will still show you that you shouldn't bet your life's savings on any economist's projection.

The Persistence of a Jobless Recovery

Some economists seem to think that the recession was over a year ago. However, the group charged with the responsibility of umpiring that call, the National Bureau of Economic Research (NBER), has still not declared this recession as being over. Theoretically, two positive quarters of growth in the Gross Domestic Product (GDP) should be the signal for such a call; and, we've had three. Yet, the NBER still remains silent.

I think the NBER is concerned about the employment situation; which, by any measure, is stalled out. As a result, any economist worth his/her salt is probably thinking that a double-dip recession is ahead of us. I think this potential reality has kept them in limbo with regard to calling the recession over.

Certainly, the initial jobless claims number that was released this A.M. gave the NBER no reason to think the economy has recovered. Once again, the number came in over 450,000 jobs. In fact, it jumped 12,000 jobs from last week's number to 472,000 claims; and, that previous number, too, was upped by 4,000 additional laid-off workers (Click here to See Story: Jobless claims rise 12,000 to 472,000). Additionally, the number of long-term claimants rose by 88,000 for the month and approximately 350,000 just fell off the roles completely because their unemployment benefits completely ran out.

This morning's horrible number in combination with last week's bad one just shows that the economy is weakening; not growing as the Obama Administration would have you and I believe. Both of these numbers, in conjunction with the miserable unemployment report of almost two weeks ago, speaks volumes as to the failure of the stimulus package to create jobs.

Don't expect anything to get better soon. In fact, the job picture is only sure to get worse next month as thousands of workers are laid off due to the suspension of off-shore oil drilling. Then, too, I think the number of non-spill related job losses is already on the rise as small and large businesses, alike, try to fight to survive the impending impact of ObamaCare and the elimination of the Bush tax cuts in January. Also, lets not forget that companies might further, be in a kind of hiring abeyance as they mull over the impact of Cap and Trade or carbon penalties that may hit their particular businesses as well. No one should kid themselves into believing that this President, his Administration, and the Democrats of Congress are, somehow, economy and job friendly.

The Economy: A True Recovery Or Just A Pause?

On more than one occasion, Glenn Beck has described our economy as being in the eye of the hurricane; giving a false indication of recovery prior to getting slammed again after passing through the back end of the eye wall., I agree.

Yesterday, the stock market was ecstatic over the fact that retail sales jumped by 1.8% in March. The Dow Jones industrial average was up by more than 100 points. But, the reality is that you can't declare the economy to be recovered on just that simple number. More often than not, retail sales is forced to go up on the simple fact that the consumer needs to buy because things break and their kids grow out of their clothes. But, we need to remember that this economy has come way down from where it was in 2007 before the housing bust. The fact that retail sales went up is like saying we've fallen 50 floors in a 100 story building and we've moved back up to 51st floor. We still have 49 floors to get back to where we were in 2007.

However, today's stories paint a more troubled economic picture that is ahead of us.

First, we had RealyTrac release it's quarterly foreclosure numbers and they were horrible. In the first quarter of this year, foreclosures jumped by 35%; the biggest jump since this recession started. Worse than that, March posted a one-month jump of 19%. Certainly, the continuation of high unemployment and underemployment is at the heart of this number; and, Obama wasted a whole year on health care when he should have been focused, instead, on jobs. I predicted this in July of last year with my blog entry: The Worst Is Yet To Come for Foreclosures.

The other bad news that we got today was that the unemployment insurance claims jumped again for the second week in a row. The latest number was 484,000 new claims; meaning that we are again closing in on the 500,000 newly unemployed per week number. The lame excuse that this Administration's economists gave for this number is that jobless insurance claims are always volatile around Easter. Of course that's true; but, not in the way these numbers played out. Traditionally, the number of claims falls during Easter week because of the unemployment offices being closed that Friday and because potential claimants have family, out-of-town, commitments that preclude them from filing claims prior to Easter. But, instead of the normal fall in claims before Easter, the numbers actually jumped during Easter week. So, in reality, Obama's minions are taking today's number out of context.

There is nothing that the Obama Administration has done to improve the employment situation in this country. In fact, he and the Democrats have done just the opposite. The per-employee mandates of ObamaCare only make companies recoil from hiring any new people; and, in fact, probably causes them to consider laying off more employees.

As part of the health care bill, Obama took over student loans in America. Immediately, Student Loan Marketing (aka Sallie-Mae) -- the largest student loan agency in America -- announced that they would eliminate 2200 jobs because they won't be handling student loans anymore. I'm quite sure that banks and other lending agencies that were also involved in student loan activity will follow Sallie-Mae's lead.

Additionally, the elimination of the Bush tax cuts, is going to force many small business that make more than $200,000 to rethink their employment levels; resulting in more layoffs. If Cap and Trade is passed or if the EPA imposes punitive penalties on any businesses for producing high levels of carbon dioxide, you can expect more jobs being cut from the economy. If some kind of Value Added Tax or national sales taxes are imposed, more people will lose jobs as a result of the expected slow-down in retail sales. Today, for example, his decision to kill the manned space program will probably result in numerous lay offs from NASA. And, God only know what this Congress and this President will cook up next to kill jobs in America. I think we are seriously looking at foreclosures and consistently higher unemployment rates to continue for many years as a result of the policies of Obama.

Another Bad Employment Number

This morning, those filing first time unemployment insurance claims rose to 496,000. That's a 22,000 claim jump from last week and substantially higher than the drop that was expected by most economists. Except for a holiday and weather related one-week drop in claims, the amount of claims has been rising in the last 7 weeks of reporting. That is the opposite of what would be expected in a recovering economy.

The Associated Press (AP) is trying to spin this as being "snow-related layoffs" (Click to See Full Story: Jobless claims rise on snow-related layoffs). Please! Since when does any employer, even in construction, let people go because of a week or two of bad whether? If anything, the weather will only delay business activities; not cancel them completely. But, the AP will do anything to soften bad news for this President.

The reality, and not some slobbering defense of Obama by the Associated Press, is that mass layoffs are on the rise again -- as I reported two days ago. Believe me, Harry Reid's $15 billion jobs bill -- the one that was passed just this week -- isn't going to do anymore to improve things than his more than 50 times that amount in the $787 billion Stimulus Bill of last year. These people just don't get it. It is both current and future Federal spending, taxes, and regulation that is killing this economy. Give businesses a stable expense and tax outlook and, I guarantee you, the economy will grow and the employment situation will turn around. Past history shows that it was Reagan's policies and not those of FDR, Carter, and, now, Obama that can turnaround and grow an economy.

Increased Productivitiy: Labor's Nemesis During a Recession

Last week's first-time claims for unemployment insurance came out this morning and, once again, they were higher than expected. A consensus survey of economists had projected that the claims number would be around 455,000; but, it was higher at 480,000. In a non-recessionary period, that number would normally be below 300,000.

But, more than the fact that more workers were laid off than expected, the productivity number for this report jumped by an amazing 6.2 percent (Click to See Full Story from CNBC: "Jobless Claims Still Gaining; Productivity Up 6.2 Percent").

Simply speaking, a productivity increase like that means that businesses are finding ways to do the same amount of work with fewer people. With the job market as tight as it is, the average worker is being forced to work harder or longer and there isn't much that they can say or do about it because there is -- on average -- more than 6 unemployed workers who would be standing in line for any job that becomes available. So, now is not the time to quit your job if you have one.

Productivity increases have a long term effect on labor as businesses find better ways to produce the same output with less people and lower costs. Often, it is these "learned" productivity increases that help sustain high unemployment levels for long periods of time after an economic recovery has actually taken place. That's why unemployment is often referred to as a lagging indicator of recovery. So, in effect, time is not on labor's side. The longer the recession lasts, the harder it will be for America to get completely back to work. That's what happened during the Great Depression.

Sadly, we lost a whole year of high unemployment and stiff increases in productivity to this President and a Congress whose policies were more focused on health care, closing Gitmo, passing Cap and Trade, and paying off a voting constituency with a phony stimulus plan. In that year, businesses "learned" how to increase productivity and, ultimately, the unemployed will suffer a lot longer because of it.

A Surprise Uptick In Job Losses?

This time of year, you would think that fewer people would be losing their jobs.

Not too many employers are so heartless as to actually let people go during the holiday season unless they were truly in bad financial shape. But, in bad shape they must be. That's because the number of first time claimants for unemployment benefits took an unexpected jump last week to 480,000 workers.

This is up from the previous week's surprise increase of 473,000 claimants (Click to See Full Story: "US jobless claims rise for second week"). Additionally, the number of people still remaining on unemployment insurance went up again; albeit somewhat slightly. But, keep in mind, that this statistic doesn't reflect how many people who just fell off the insurance rolls because their benefits have run out. And, it doesn't include those who either gave up looking for work or who have become underemployed because they decided to stop taking unemployment benefits and take either temporary work or work a job that is below their normal skill level.

Apparently, no one got the memo from Obama's chief economic adviser, Larry Summers, who, just this weekend, said the recession is over and that businesses are expanding; although he can't pin down the "pace".



With that in mind, we should be seeing a leveling off of jobless claims; not an increase as we have seen this morning.

It's the Underemployed, Stupid!

Last Friday, the Bureau of Labor and Statistics (BLS) reported an unemployment rate of 9.4%. This was a drop from the 9.5% rate of the previous month's report. This is despite the fact that the there was a net increase in the unemployment rolls by 247,000 newly unemployed workers.

The only way you can actually have "more" unemployed in any given month and, yet, have a lowered unemployment rate is to "play" with the total number of workers who are in the available workforce. So, in effect (and so illogically), the BLS is claiming, in last Friday's report, that the workforce grew by some amount of new workers and all those "new" workers "entered" this new, larger workforce pool; bringing their jobs with them. Therefore, the "unemployed" -- though higher in their amount -- actually represented a smaller portion of the total workforce and, consequently, the unemployment rate went down. That highly improbable fact was completely swallowed by our national media; without question.

What most people don't really understand is that an agency like the Bureau of Labor and Statistics doesn't really know what the "true" unemployment rate actually is. They don't actually interview the 300 million or more people in the country each month to determine who is "working"; or, who is retired from the workforce; and, who his employed versus looking for work. Instead, they use both "samples" and "assumptions" to come up with the unemployment rate. Any changes, in either the sample data or their assumptions, can have a big impact on their resulting calculations of the unemployment rate. And, that is what happened, conveniently for the Obama Administration, last Friday.

All you had to do is look at the weekly "Jobless Claims" number that was reported the day before the Unemployment Report was released on Friday to know that the unemployment situation isn't really getting any better. In that "jobless claims" report of Thursday, the number of people losing their jobs was surprising less than expected; but, the back-story of that report was that more people continued to claim unemployment benefits; showing that the job market is very tight and that people who are losing their jobs are still less likely to get rehired. In fact, the amount of people still claiming benefits jumped by 69,000 workers from the previous week (Click to See Full Story).

The problem with all these reports is that they "don't" include the accounting for what most economists call the "underemployed" (Click to See Full Story). While the Feds try to overcome this short sightedness by conducting what they call the "household survey", they are generally way off the mark.

A good example of the underemployed is my brother. He is a fine arts artist. His gallery sales are down to trickle, at best, and he is now living off of his savings. To the Federal government, he is not consider to be unemployed. The same is true with my brother-in-law. He and his wife have a plant rental and placement business. He lost his very last commercial account a couple of months ago. He has no income from his business and the Federal government still considers him to be employed. A farmer who has no income because of any complete crop damage is also "not" considered to be unemployed. In addition to those people who have small businesses that are, in essence, out of business, there are a number of people who have just given up it trying to find a job. These are the people who have exhausted their unemployment benefits and just can't find a job anywhere. Some of them are our new homeless that are now inhabitants of those "tent cities" that seem to be cropping up all over the country. Generally speaking, these are people who have both lost their jobs and lost their homes to foreclosure.

The fact is that the unemployment rate is a number that can be tweaked; politically, if necessary, and without actually being accused of lying. It's all about the assumptions; and, like many have said before this, just look at the first three letters of the word assumptions! Most economists, now, think that the true unemployment rate is upwards of 15%. In fact, the best source of information about what "might" be the true unemployment rate comes from this website of economist John Williams (Click to See Full Story). Note: Be sure to look at his "Disclaimer" statement that can be linked-to at the bottom of this report.

Politically, the headline that the unemployment rate fell was just what Team Obama needed to tout that their Stimulus Plan and all the other measures that they have taken are working. However, I believe this to be a political ruse. Other reports, like Personal Income and Spending (Click to View Charts) and Consumer Credit (Click to View Charts and Graphs), say just the opposite; and those numbers are falling off a cliff. To top that, Consumer Confidence, as reported by the independent and non-government Conference Board, has fallen over the last two months as people retreat from the optimism about this economy and increase their concerns over the ineffectiveness of Obama's Stimulus Program.

Never forget this old saying about statistics: "There are lies; damn lies; and, then, there are statistics!" I would be careful of any government agency, like the Bureau of Labor and Statistics, that proudly bears the word "statistics" in its name. After all, it reports up through and to the President, President Obama; who desperately needs some good news about the economy to stop his falling in the polls and to ram through his Health Care Reform and Cap and Trade Bills.

More Confusing Unemployment Numbers

In past blog entries, I have expressed my confusion over the numbers being released by the Bureau of Labor and Statistics. Friday's employment report just deepened that confusion.

First let me say, a consensus of economists had predicted that the amount of jobs being lost for last month should exceed 500,000. Because of that, those same economists projected a 9.2 percent unemployment rate from the current rate of 8.9 percent.

Remarkably, only 345,000 jobs were actually lost last month. That was 155,000 jobs better than the estimates. Further, the two previous months were also adjusted retrospectively to reflect less jobs being lost than had been previously thought (See Full Story). I say remarkably, because the weekly unemployment reports have been showing an increasing number of workers who were remaining unemployed and collecting benefits. That's the primary reason why the surveyed economists projected a loss of jobs in excess of 500,000.

The kicker comes in with the new unemployment rate being higher than estimated or an actual 9.4 percent versus the expected 9.2 percent. This is despite the loss of "less" jobs last month and the favorable revision of job losses for the two previous months.

To me, this higher than expected unemployment rate is a result of the Bureau's understated unemployment rates in previous month's and, now, their attempts to rectify their bad math. Something that I had complained about before in this blog (See my blog: "Some Fuzzy Math On Unemployment").

I am still having problems with this month's numbers. For sure, the Census Bureau's hiring of over a million workers in the next 9 months is probably muddying up the facts. But, it is interesting that no additional jobs were shown in the "Government Jobs" category of the report; accounting for additional census workers being hired. In fact, the "Government" actually shed 7,000 jobs in the last month. That to me is a head scratcher since the initial batch of census employees began being hired last month.

All in all, the report has some real inconsistency issues. The unemployment rate jumping as it did with a less than expected loss of jobs makes absolutely no sense. The lighter than expected job losses is inconsistent with the weekly unemployment benefits claims. And, where are those Census Bureau hires?

As the above referenced article mentions, most analysts believe that unemployment will jump to a rate of 10 percent of more. Some say as much as 10.7 percent. It is hard to believe that we won't go above 10 percent with 7 months left to report for this year and with the rate now sitting at 9.4 percent. With thousands of jobs being lost in the auto industry (dealers and assembly line workers), it is my guess that the year end number will be closer to 10.7 percent; rather than 10. To date, only 4 percent of the stimulus package has been spent. But, if you look at the actual spending details, many of the jobs being created by the stimulus program are short-lived in nature; such as the filling of post-winter potholes in Iowa and other road repairs (See a typical story about the stimulus package spending). Once those projects are done, any people that were hired will be back on the streets.

Lastly, there will be a lot of college grads who are now entering the job market and, in most cases, won't be able to find jobs. This, too, will push the unemployment rate up.

In conclusion, expect the Obama Administration to spin the 345,000 job loss as a "BIG" improvement and try to give us all the impression that their Stimulus Package is working. Of course, they will completely ignore the inconsistencies that I have pointed out. Let's not forget that Obama's own economic team said that the unemployment rate would top out at 8 percent for this year. At the current rate of 9.4%, they missed that mark by over 17 percent. Now, I guess I shouldn't hold my breath waiting for an explanation of why they were so far off on that number! You've got to wonder how many "other" numbers they are off by at least 17 percent --- and still counting! That's why I believe we will be closer to a $2.2 trillion deficit for this year than the Administration's early estimate of $1.7 trillion.

I would hope that America wakes up to the fact that we are getting spin after spin and no real facts from this White House.

Jobs

Tomorrow is another big day in measuring our economy. That's when we will find out what the new unemployment rate will be through the end of March. The current unemployment rate, based on February's readings, is at a level of 8.1% of the workforce.

My guess is that we will actually see an unemployment rate of 8.7% or, even, 8.8%. This is somewhat higher than the current consensus estimate of 8.5%. I'm thinking higher because, for the last four weeks, we have seen first-time, weekly unemployment claims in a range of 660,000 to 670,000. That's a lot of jobs being lost. This morning, the loss number came in at 669,000 new claims for the week (See Full Story).

In good times, the first-time unemployment claims would have been somewhat south of 300,000 in an average month. But, now, in this recession, we are consistently clocking in at a rate that is at least 360,000 claims "higher" than in a non-recessionary period. Therefore, on a four week basis, that means that we are losing more than 1.4 million jobs above what would be normal. Granted, some of these claimants will find new jobs and come off the unemployment rolls and "net" job losses for the month will be substantially lower than 1.4 million. For that very reason, both January and February saw net job losses of 650,000 for each month; despite losing in excess of 1.2 million jobs in both those months. If we simply continued losses at the 650,000 rate and all things remained equal then, for sure, we would probably see an 8.5% for tomorrow's unemployment rate.

But, having high unemployment rates for so many continuous months has an overall debilitating effect on the job market. That's because jobs losses start feeding on each other. As the unemployment rate increases and more and more people are without work, less and less money flows into our economy. As a consequence, more jobs are lost because the overall business activity of the country is slowed. So it goes on and on until the level of business activity is able to find some kind of bottom. That's why I think that that there will be less people able to get reemployed than had been seen in previous months. For that reason I'm betting tomorrow's unemployment report will exceed 700,000 jobs being lost with an overall jobless rate of at least 8.7%.

Now, it should also be pointed out that any number below (better than) 8.5 percent could be considered a strong jobs number. That could mean that we are near a turn around because the high weekly jobs claims aren't being equated into a substantially higher unemployment scenario. If that did happen, the stock market would clearly continue its upward trend and the optimism of the last four weeks.

The Perpetuated Lie on Economics

If you have listened to the speakers at this week's Democratic Convention, you would think that most of America was living a "gulag-like" existence because of the economic policies of George Bush. They would have you believe that it was "Standing Room - only" at the unemployment offices. That soup lines were wrapped around our city streets. That families, thrown out of their homes due to foreclosure, are huddled around abandoned and overturned oil barrels and burning scraps of wood and newspapers to keep warm. Cars are rusting in the streets because the average American can't afford to drive them to work as a result of the Bush friendliness to the big oil companies and the resulting high gasoline prices. Then, amid all this poor and middle class torment, you have the wealthy friends of "W" laying around on their roman-style lounge chairs and watching their flat screen TV's while laughing riotously as they watch the nightly news and see the poor of this country struggling to survive. What a horrible scene they seem to paint.

Of course, this portrayal of the downtrodden is the same populist message that the Democrats and many socialist dictators have used over the years to gain control of a country. From Mao to Lenin to Castro and to, most recently, Hugo Chavez in Venezuela, this message plays well to the "working classes" and the "poor" of our society. To some extent, this talk-down of the American economy has worked. In the last 7-1/2 years of polling during the Bush Administration, the majority of respondents have said that they thought that economic conditions in America were bad. However, when they are asked about their own situation, the majority thought that their own personal situation was alright. The national media has done much to promote the false belief about the economy. They bury the good news about the economy in the bowels of their media pages. At the same time, they try to make George Bush look ineffective by putting any economic bad news on the front page. They've done this with the economy and they have done this with the war in Iraq.

Putting the perceptions, as painted by the Democrats, aside, it is the economic facts that tell the real truth. The facts are simple. While Barack Obama and the rest of the Democrats keep claiming a woeful economy that is in recession, this week's economic figures continue to say something entirely different.

First, this morning's revised numbers on the Gross Domestic Product ("GDP") showed that the economy just didn't grow at a weak 1.9 percent, as previously thought, but, instead, came in at a healthy 3.3 percent for the 2nd Quarter (See Full Story). Barack Obama has been saying we are in a recession for the last 10 months or more. However, the GDP numbers for the last 3 quarters, alone, prove what he keeps saying to be seriously flawed. In fact, Obama is now running a TV ad that mocks John McCain for saying that he doesn't think we are headed into a recession (Click to see that Obama Ad from August 12, 2008). Apparently, the Obama people are relying on the fact that, with the help of the national media, America will just believe his lie about this economy. But, two strong quarters of GDP make John McCain to be the better prognosticator of what is happening in our economy and not Obama.

This morning, once again, the Jobless Claims number fell 10,000 claims since the rise we saw in and around the increase of the minimum wage (See Full Story). As I had said previously (Click to see my previous blog entry) the "claims numbers" should be rising if we were truly in a recession.

Yesterday, the Durable Goods orders (a measure of expensive capital items being purchased by consumers and corporations) was up at a higher rate higher than expected (See Full Story) . The economists had projected a meager one-tenth of one percent gain. But, the number came in 1300 percent higher at 1.3 percent. This number is significant because it shows that corporations are comfortable enough with their business environments to spend their reserve cash for expensive, big ticket items like heavy machinery, trucks, etc. Items that mean employment for high-paying manufacturing jobs. If a company saw bad days ahead, they wouldn't be committing that kind of money to items that may or may not contribute to the bottom line in the months to come. Simply speaking, they would prefer to keep the powder dry.

Lastly, home sales were a surprise as reported on Tuesday (See Full Story). This is important because it might signal a bottom to the housing crisis. Certainly, we will need next month's numbers in order to confirm a true bottom.

Throughout the Democratic Convention, not once has anyone ever a mentioned 9/11. The reason for that is that they might have to explain why Bush had to implement his tax cuts. It would also lead to an explanation of the Clinton recession that was handed to Bush. Throughout this campaign, Barack Obama has claimed that he, not McCain, is the economic lighthouse that this country needs. Unfortunately, his economic lighthouse is a mirage. A mirage that is sending false economic signals to Americans in hopes that he can win the Presidency and hoist a whole host of expensive socialistic programs on America. Plain and simple, Obama has and is lying about the conditions of our economy for his personal gain. His claims about the economy are similar to his false claims about the surge in Iraq. The Democrats have never (and will never) admit to the fact that tax cuts turned this economy around after the fateful events of 9/11 and Clinton recession of 2000.

They have cherry-picked facts to make the economy look worse than it is. If you listen to Barack Obama, the Clinton Presidency saw a $6,000 increase in the average salary and 22 million new jobs. However, they never admit to the economic situation of the Dot-com boom that really accounted for this fact (Click to see my previous blog entry). They choose to ignore the recession at the end of the Clinton Administration and the disastrous effect 9/11 had on our economy just months after Bush took office.

I have been committed to writing this blog because there is just to much "fog" associated with the politics from both the right and the left. However, my focus has been on the Democrats because of lies that started with Bill Clinton and that have been perpetuated by the left-friendly national media and our Democrats in Congress. I saw Bill Clinton snooker this country with lies about the economy and mistake after mistake in foreign policy. All you have to do is look at his less than bold mistake in Somalia and in the now-famous "Black Hawk down" incident to know this. Also, look at his timidity towards capturing/killing Bin Laden and how that may have ultimately cost thousand of American lives on 9/11. Now, we are possibly at the precipice of another weak President, called Barack Obama, who is using the Clinton lies to bolster his non-existent experience and left-wing garbage about economics. I just think the true story has to be told. I do this with facts and links to the facts rather than make some hollow statements, or by name calling like so many people on the left. There is a reason that there has only been one Democratic President since FDR to get re-elected and, believe me, that should not have happened. But, Bill Clinton was a smooth liar who got elected on an economy-stupid-lie in the first place and, then, got re-elected on the false belief that it was his economic polices and not the dot.com boom that was responsible for the good economics of that time. I see the same smooth lies coming from Obama and I will do everything to expose those lies in this blog.

We're Still Waiting....Mr. Obama!

This morning, the first-time jobless claims fell, again (See Full Story). This time by 13,000 "fewer" new claimants than last week. Ever since the jump in claims that occurred in-and-around the effective date of the new the minimum wage, the unemployment insurance claims have been falling.

If we were actually going into a recession, these numbers should be climbing. A best, during any recessionary period, they would just be holding and not falling. The fact that they are falling indicates, at least to me, that the third quarter, like the last two quarters, may be wind up being "positive" in growth. Don't forget, you need two "negative" (no-growth) quarters to normally declare that we are in an actual recession. We had growth of 1.8% in the second quarter and, before that, we had growth of just under 1 percent for the first quarter. Unless business activity completely and literally falls of the cliff in September, I seriously don't think that the this year's third quarter will show anything but positive growth.

Three factors might be accounting for this. First, over the last few years, the U.S. dollar has fallen significantly against other major currencies. This has made our products cheaper to sell overseas. At the same time, it has made foreign products more expensive; especially imported oil. As a result, these conditions tend to force foreign interest in our own products and to force domestic buying in our now-competitively-priced American-made products. Last month that fact was shown in good export/import activity; except for the fact that we keep importing massive quantities of foreign oil. Secondly, the stimulus checks are still in the process of being used up. This is helping our local economies and keeping jobs in tact at service oriented businesses like fast food restaurants, etc. Third, our economy is still pretty powerful despite the oil/energy and credit crises. Our economy has always been strong enough to to support "two" wage earners for most still-married families and, on top of that, absorb an additional 15 to 20 million illegal alien workers. And, do that while still maintaining an unemployment rate of below 6 percent. No other economy in the entire world can boost that fact.

I realize that the Democrats want to see a recession so that they can look like the white knights that "could" save the economy and, so, they can blame the Republicans and George Bush as the culprits for a bad economic situation. As usual with the Democrats, they would just love us to fail. They wanted us to fail in Iraq (which we haven't) and they would love our economy to go belly up. For them, it helps play into their "constant doom-and-gloom portrayals" of the United States. But, my guess is that all bets are off in having a negative quarter this time around. So, that means that we will probably go to the polls with another positive quarter under our belts. It also means that we might not see a declared recession until Spring of next year or even later. I'm sorry, Mr. Obama! Poor Barack has be saying that we were in a recession since 2007. But, well, we're still waiting, Mr. Obama!

Lastly, a couple of comments about the "linked" news report in the first paragraph. That news report states that any jobless claims about 400,000 jobs is considered to be a weak economy. That may have been true 18 years ago but, based on the size of our work force, today, that number is better stated at 450,000 or higher; probably, 500,000. Second, the four-week moving average is high because of a totally unexpected jump of nearly 80,000 jobless claims that occurred around the time of the new minimum wage. With claims falling, that four-week average will be coming down. (Apparently, the CNN writer who wrote that report doesn't know how the calculation for "averages" works!) But, we know that CNN, like a lot of news media, is an Obama supporter.

Confirmed?

After having the Weekly Jobless Claims numbers jump by 34,000, two weeks ago, and by 44,000, last week, today's numbers came in at a tepid increase of only 7,000 new claimants (See Full Story). This is a more typical rise in unemployment benefit claims; even in a weak economy. If we had continued at the rate of the last two weeks, we would have been losing jobs at a rate that was nearly 3 to 4 times higher than all the jobs that had been lost in the last 6 months. More than a million people would have become unemployed. That reality that would have clearly spelled "recession". This week's jump in the jobless claims number plays well into what I had previously written about the effect of the new minimum wage (See Full Story).

There is no way of telling whether or not I was right about jobs being lost as a result of the 9% increase in the minimum wage. The actual statistics get muddied by all the announced corporate layoffs and job cuts that may or may not have been implemented in that same time period. However, you cannot deny that there were substantial claims the week before and the week after that new minimum wage rate went into effect (See Full Story). The fact that job losses dropped significantly this week gives the appearance that I may have been right. Was it just a coincidence? Maybe? Who knows?

It should also be pointed out that minimum wage earners are generally new workers who might not have sufficient time in the job (usually called the "base time" or "base period") to qualify for unemployment insurance. This varies by State. Those in this situation will not show up in the Weekly Jobless Claims number because they will not be awarded any benefits.

Another Bad Jobless Claims Report

Last week, there as a jump of nearly 30,000 first time out-of-workers who filed for unemployment benefits. This week was even worse. That number jumped by 44,000 jobless claimants in a single work week with, now, 448,000 "total" workers filing for unemployment (See Full Story).

To put this into some perspective, this kind of jump isn't usually seen unless we have a serious national event such as 9/11 or Katrina or a national labor strike. Usually, increases in the jobless claims will run from an 8,000 to 12,000 increase in jobs per week in a weak economy. A jump of 44,000 is hardly normal!

I still believe that the automatic increase in the New Minimum Wage, that went into effect last Thursday, is at heart of this sudden jump in unemployment. My reason for this are contained in my blog entry titled: "The New Minimum Wage Effect?" (Click to See My Blog Entry). The economy is only growing by, at best, 1 percent. Suddenly, employers across the country are faced with a "Twelve Percent" unearned and automatic increase in their least senior employees.

What would you do if you were an employer and you were already struggling to pay your bills in this soft economy? My guess is that you, too, will let your least senior person go and that's the problem. If I am right, you should see an easing of this situation in the next two job reports. If I'm wrong and this is a trend, we are "seriously" (very seriously) heading for a hard recession.

Image by inoneear's photostream on Flickr with Creative Commons Licensing (Click to View Other Works).

The New Minimum Wage Effect?

Last Thursday, the Jobless Claims number jumped to 406,000 new claims from the week's previous claims number of 372,000 (See Full Story). This was an unexpected jump and, it was one of the reasons, besides the decline in existing home sales, that caused the stock market to tumble almost 300 points for the Dow Industrial Average. On that very same day, the minimum wage was automatically set, by law, to increase from $5.85 an hour to $6.55.

As far as I know, no one seems to have put together the new minimum wage rate and the rather unexpected increase in the job's claims that we saw last Thursday. While I have no proof of this, I think that there might be a correlation between the two. Think about it. We are in the midst of an extremely weak economy. Knowing this and knowing that they will be forced to give "unearned" raises to some of their "least senior" employees (and, maybe forcing all other employees to get an unearned, but equalizing, wage increase), isn't it possibile that some employers were actually forced to let people go in order to avoid paying the higher minimum wage? It has been proven, through study after study, that job losses occur as a result of increasing the minimum wage . Just look at this report from 1996 that, I believe, swayed Bill Clinton in deciding to let the individual States determine their own minimum wage levels (See Full Story). If, in the next two or three weeks of jobless claims reports, we see a greater-than-expect drop in the new unemployment claims for that previous week, I think that this would be evidence that jobs were actually lost to the new level of the minimum wage.

I have always been against the Federal minimum wage.

First, it is almost exclusively used by the Democrats as a maneuver to satisfy their political base of both unions and independent low income labor. But, mostly the unions. A lot of people are unaware that many union contracts have clauses that force an automatic wage adjustment whenever the minimum wage is increased.

Second, an increase in the minimum wage can easily be across-the-board wage inflationary. Typically, the Federal minimum wage only affects those entry level positions in any business. When the minimum wage increase occurs, the gap between the least senior and the next level of employee is either closed or can even be exceeded. To compensate for this, the employer must push all of his wages "up" from the bottom. This can be devastating to company who might be barely profitable before the minimum wage went into effect. That could result in tough economic choices; and, usually, jobs or benefits are cut and/or prices are raised. Even companies who are in good shape, economically, might have to raise prices or let people go. You and I eventually pay the price as a consumer for higher prices and as a taxpayer for the unemployment insurance.

Third, and most importantly, a living wage is different from one part of this country to another. It is even different within the urban and rural areas of the same State. What might be a minimum, living wage in rural Tennessee or Mississippi would be pure poverty in places like New York or San Francisco. That's why the minimum wage levels should be set by the individual States (and even cities) and not by the Federal Government. Bill Clinton was right on this.

You will never hear from a Democrat that raising the minimum wage would actually result in job loses. Just as you will never hear from those same politicians that the elimination of Welfare, in 1996, was a social benefit and not "the social disaster" that they had all predicted. When the Democrats raised the minimum wage this time around, they did it to satisfy one of their political bases: the labor unions. It certainly didn't help those low income, non-union employees that may have lost their jobs because of it.

Image by Daquella manera's photostream on Flickr with Creative Commons Licensing (Click to View Other Works).