Economy worse today than Great Depression

There is a neat article at Zero Hedge blog called "Why this feels like a depression for most people" by Jim Quinn from the Burning Platform Blog.  He said that even though there are no soup lines, the statistics confirm that we are presently living through economic hardships that are far worse than the Great Depression.

Surely we must consider there were fewer people in the U.S. during the great depression, but these statistics are overwhelming regardless.  Consider.

• There were 12.8 million Americans unemployed during the Great Depression. These were the men pictured in those soup lines. This is estimated, because the Department of Labor did not keep official unemployment numbers until 1940. That comes to 24.9% of the Labor Force. 
• Today, there are 46 million Americans unemployed. This is the U3 number that is reported, which comes to 5.1% of the Labor Force.  It does not include the people who have stopped looking for work, so it actually makes the economy look better than it really is.
• Today, there are 94 million people not working or not participating in the Labor Force, this is the highest this number has been (or the lowest labor force participation rate) since 1977. This is the U6 unemployment number, which comes to about 14%. It includes all the working age people who are currently not working.  
• Those 94 million not looking for work are not starving; they have become official dependents of the government
• 94 million not looking for work, 8 million officially called unemployed, equals 40% of the population not working. 
• Sixty-two percent of the labor force is working; 38% not working
• Today, there are 123 million households in America and 23 million of them are on food stamps. Therefore 19% of all households in America require food stamp assistance to survive. So food stamps have replaced soup lines, so they are not seen.  We do not see hungry people in the U.S. today, so we do not know how bad the economy really is. 
• In 1933, there were approximately 126 million Americans living in 30 million households.  
• In 1933 there were no food stamps
• In 1933 there was no welfare
• In 1933 if you did not work you didn't eat
• In 1933 there was no incentive to stay at home and collect welfare, because if you didn't work you didn't eat.  You see, people did not give up looking for work, because they needed to feed themselves and their families.  
• In 1933 people didn't become dependents of the state
• In 2015, greater than 109,631,000 live in households receiving federal welfare benefits, according to the Census Bureau. That equals 35.4 percent of all 309,467,000 people living in the U.S.
• In 1933, you had to work, you had to walk to and stand in, soup lines to receive charity
• In 2015, you can be among the 94 million not working and have a roof over your head, have a cell phone, a car, your home is probably air-conditioned, and you're eating as much as you want.
• Daily Caller: "Fifty-one percent of working Americans make less than $30,000 a year." This data from the Social Security Administration. That's $2,500 a month before taxes. That is just above the federal poverty level for a family of five. "The new numbers come from the National Wage Index, which SSA updates each year based on reported wages subject to the federal income tax." So half the folks who are working don't have any disposable income, and therefore are unable to propel the economy.

Then you can add the following, and it gets even worse.

• Open borders so anyone can get in, legal or not
• Our borders are flooded with low skilled, low educated people who cannot command any kind of a decent wage because they're not qualified, and most qualify for entitlements that we pay for
• People who work are paying for it, whether they want to or not.
• Government controlling what kids learn, and not parents. It's called Common Core, although most schools won't call it that because 54% of Americans hate Common Core.  It's faceless bureaucrats in Washington deciding what kids should learn instead of parents. 
• We are $18 trillion in debt
• We are printing money left and right and dumping it into the stock market (called quantitative easing) to maintain the stock market bubble that is going to pop some day
• We are paying people not to work

What these statistics show, other than that we are in a depression, is that liberals like Obama are buying votes. That's why we have 94 million people not working and they are all eating; they are all living comfortably off the government, and that's why these numbers keep getting worse; that's why so many people vote for liberal democrats, and why Bernie Sanders even has credibility in the democratic party despite publicly claiming to be a socialist who hates capitalism. That's why Obama got elected two times. He, in essence, bought votes with our money. That's what FDR did too.

And don't get me wrong, I do want to help the needy. I'm all for charity.  However, the best way to help the poor is not by giving them something for nothing.  The poor must work for what they receive. We need to put them to work if they receive assistance.  We need to make the poor uncomfortable so they have an incentive to keep looking for work.  

Look, these statistics show that, even adjusting for the population increase, current abysmal economic statistics are far worse than during the Great Depression.  We have more people not working, and more people not looking for work.  And it isn't getting better, won't get better, by creating more programs that take from those who work to create more government programs that give to people who quit looking for work; who have no incentive to look for work.  

Related Links.

• ZeroHedge: Why This Feels Like A Depression For Most People
• ZeroHedge: Record 94 Million Americans Not In The Labor Force; Participation Rate Lowest Since 1977
• Millennials Are Coming of Age in a Depression -- They Just Don't Know It
• Ed Source: Poll shows most parents hate common core

People who believe unemployment rate is 5.5% are fools

So, the White House is reporting a 5.5 unemployment number, the best it's been since 2008.  This sounds good, especially considering 4.6% is considered no unemployment. This is true because it's not possible for every person to have a job all the time, as people are shifting jobs all the time.  So the 5.5% unemployment number comes out and we are supposed to be all happy and think that the recession is over.

Yet this is not true once we investigate the numbers.  First of all, we must realize that the 5.5 number is the U3 unemployment number. It does not count the number of people who have given up trying to find a job after being out of work four years. If you're not actively seeking a job and you don't have one, you're not counted as unemployed. When you count those who are no longer looking, it's called the U6 number. The current U6 unemployment rate is 10.3%.

Right now there are a record 92.8 million working age people no longer in the workforce, and that is a 37 year low (and it's been a record low now for 11 consecutive months).  The total number of people 16 and over who are able bodied people who could be working is 243 million, so that means that almost half of the people who could be working are not.

Of course the actual percentage of working age people working is currently 62.8%, which is at a 37 year low.  That means that 37.2% of working age people are not working.

What we do know is that all of these people are eating. It used to not be that way.  It used to be that if you weren't working you weren't eating, and that was your incentive to get a job.  If you weren't eating when you weren't working, you bit your pride and got any old job. That might mean working at McDonalds.  That's not the case today as a record 50 million people are on food stamps.

No matter how you look at it, people who think the 5.5% unemployment is accurate, and that it's an indicator that the economy is getting better, are fools.

Further Reading:

• Articulating ideas: A closer look at jobs numbers
• Track the U6 Unemployment rate
• Rush Limbaugh: CNN overjoyed by phony jobless numbers

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.