Dear John: The December unemployment report brings up a nagging question I’ve been thinking of for some time. The unemployment rate has been dropping steadily for the last couple of years.
Putting aside the reasons why for now, here’s what I’m wondering:
Is it conceivable that in a year or so, we could be looking at unemployment [of about] 5 percent, or some ballpark that’s considered normal? If so, wouldn’t the government be running into a brick wall of a credibility problem at that time?
Would they be able to present the situation as normal? Would the American public buy this, given the really low labor-force participation rate? It seems there’s potential for a lot of resentment in that scenario.
Maybe the government should be thinking of some alternate metric before we get too far down the road.
Personally, I believe the employment situation is still pretty anemic. I’d extend unemployment benefits. I have to believe people still prefer to work, there’s just not a lot to be found.
G.H.
Dear G.H. I think the government already has a credibility problem with all its statistics.
Inflation is higher than Washington is pretending. The economy is growing more slowly than the mid-2 percent the government says.
But the unemployment rate is the most egregious strain on credulity.
Here’s the problem: The government can’t just shut down its statistic-gathering operation. That would also be a disaster.
So we have checks and balances, like there are in so many other parts of a democracy. The government and our politicians say one thing, and people like me dispute it. I’m just happy that the rest of the media seem to finally be coming around to looking at government economic data skeptically — hell, the press has looked idiotic these past five years.
But also keep this in mind: Government statistics were never meant to be correct from the minute they are put out. That’s why economic numbers are repeatedly revised.
The media and investors are the ones who have come to take government stats as immediately infallible. The jobs figures, for instance, are put out at 8:30 a.m. on the first Friday of the month, and suddenly everyone’s opinion of the economy is swayed.
Only a minority of people — on Wall Street and in media — start wondering where the numbers may be faulty.
And fewer still dig deeper into the government’s stats.
For instance, the December jobless rate was really 13.1 percent when you count people who only have part-time jobs but want full-time ones. The headline number, as you probably know, fell from 7 percent to 6.7 percent because people were too discouraged to look for work.
So why isn’t the 13.1 percent figure given more publicity? It comes directly from the Labor Department’s own tables.