Obama's economic statements misleading

I used this quote on another post on this blog, although I find it so amazing that I must use it again to make another point.  Consider the following from a March, or April, joint press conference with Obama and German Chancellor Angela Merkel.

We've learned that our businesses created 273,000 new jobs last month. All told, our businesses have now created 9.2 million jobs new jobs over 50 consecutive months of job growth. The grit and determination of the American people are moving us forward. There's plenty more that Congress should be doing from raising the minimum wage to creating good construction jobs rebuilding America. And I want to work with them wherever I can, but I keep acting on my own wherever I must to make sure every American who works hard has the chance to get ahead.

First of all, the numbers he uses are misleading.  While the Bureau of Labor Statistics report that 273,000 jobs were created last month, 800,000 people left the workforce.  So while the unemployment rate presently sits at 6.3%, the U-6 unemployment rate sits at 13.6%.  This is a more accurate depiction of the 963,630,000 people in America currently not working.

Another thing to note here is that Gross Domestic Product (GDP) is influenced by three factors: consumer spending, business spending, and government spending.  If consumer spending is not rising, and business spending is not rising, then a rise in GDP can only be explained by government spending.  If government spending is needed to make the GDP rise, it reveals the market is not self sustaining.ector does.

Other than his statistics, the rest of Obama's comments are also misleading.   If "the grit and determination" were actually working to improve the economy, then the government would not need to take action in order to stimulate the GDP.

Besides, the government doesn't create good construction jobs anyway, the private sector does.  Yet, I suppose, if you don't have a good understanding of economics 101, which is no longer taught in public schools just for this reason, you'd have no clue you were having the wool pulled over your eyes.

In fact, if you read the entire quote, the 1st part suggests the economy is booming, and the second part says the government needs to create jobs and artificially raise wages.  The first part completely contradicts the second part.

I suppose if you were the leader of a nation and your policies are failing, you'd spin the statistics too.  I wouldn't.  I can honestly tell you that if what I did failed, I'd recognize it and try something different.  I would not lie to make my failures look like successes and continue trudging forward with what's not working.

What is the U-6 unemployment number

U6 Unemployment Rate from 2000-2014

According to the The Bureau of Labor Statistics the unemployment rate dropped from 6.7 to 6.3% in March of 2014.  While these numbers have some thinking the economy is improving, others suggest these numbers may be misleading.

This is especially true when matched up against other statistics provided by the Bureau of Labor Statistics, which show that 800,000 fewer people were in the workforce in March, making the total of 92,594,000 . When you compare these statistics with the unemployment number, we can see that something doesn't add up.  

As a matter of fact, if news outlets report that the unemployment rate dropped in March, that looks good for Obama.  That is the intent of the methods of doing the unemployment number.  The reason they look so good is not because jobs were created, but because the unemployment rate does not include people who have given up looking for work.

A better number than the unemployment number is the U-6 unemployment rate. This number includes all people of working age who are not working.  So, while the reported unemployment rate for March was 6.3%, the U-6 unemployment rate was 12.6%.

The despite the misleading numbers, Obama uses them to his advantage.  Consider the following quote by Obama from a joint press conference with Obama and German Chancellor, Angela Merkel.

We've learned that our businesses created 273,000 new jobs last month. All told, our businesses have now created 9.2 million jobs new jobs over 50 consecutive months of job growth. The grit and determination of the American people are moving us forward. There's plenty more that Congress should be doing from raising the minimum wage to creating good construction jobs rebuilding America. And I want to work with them wherever I can, but I keep acting on my own wherever I must to make sure every American who works hard has the chance to get ahead.

While those numbers may be good public relations for people who don't understand economics, we understand that they are misleading, and not truly representative of true economic status.

Bottom line: the U-6 unemployment number is the number that should be used to measure economic status, and the U-6 number should be reported by the media -- no matter who the president is.

You can check out the history of the U-6 unemployment rate at portalseven.com.