Most observers in America live and die according to the official economic reality as defined by government statistics. Politicians certainly do. Over and over again Barack Obama has told us that the economy is recovering, albeit slowly. Every time he did so in 2010, an election year, the President reminded us about how many jobs had been created that year. From CBS News' Obama Heralds 1.1M Private Sector Jobs Created Since January, published on November 5, 2010—
Hailing the "encouraging news" from Labor Department announcement, that October saw the addition of 151,000 new jobs, President Barack Obama said the private sector has created 1.1 million jobs over the last ten months.
The Labor Department said that the private sector added 159,000 new jobs last month, with an overall net increase in employment of 151,000.
"We have seen four months of private sector job growth above 100,000 which is the first time we have seen this kind of increase in over four years," Mr. Obama said. "Now, that's not good enough — unemployment rate is still unacceptably high. And we've got a lot of work to do. This recession caused a great deal of hardship and it put millions of people out of work.
"So in order to repair this damage, in order to create the jobs to meet the large need, we need to accelerate our economic growth so that we're producing jobs at a faster pace.
All the numbers Obama cites are from the Bureau of Labor Statistics. The consensual economic "reality" and how people view it is ultimately defined by government statistics. Of course, actual Reality is out there somewhere, but we can't get a hold of it.
The government makes occasional revisions to the agreed-upon economic "reality" they define. These revisions make a mockery of previous claims like those of Barack Obama last November 5th. The January jobs report included the Labor Department's latest benchmark changes.
From Tim Iacono's Another Half Million Jobs Lost in Revisions. 483,000 jobs disappeared, many of them in 2010. Tim also quotes the Wall Street Journal's Economics Blog: "Paul Ashworth of Capital Economics noted [that] 'before the revisions, the estimates suggested that over the past year 1.1 million of the 8.3 million jobs lost during the recession had returned. Now it appears that only 950,000 of the 8.7 million jobs lost have been recovered'.”
Don't hold your breath waiting for Obama to revise his November 5th speech. These latest changes are part of a consistent pattern of downward revisions to "reality" by government institutions. Some months were revised up, some were revised down, but on balance it always turns out that the economic situation was worse than previously reported. Do you remember the changes to GDP made last July by the Commerce Department?
Graph Source. The left scale shows real (inflation-adjusted) GDP in billions of 2005 dollars.
Can we trust current government numbers? Absolutely not! There is a persistent positive bias in those numbers. Can we trust politicians who cite these soon-to-be-revised-downward statistics? Well, we can never trust politicians—this goes without saying—but here is yet another reason. Conveniently for the President and his supporters, the rosy bias in current government statistics often serve their political ends.
I have consistently called such political speech propaganda, and for good reason, as I have shown in part today.
Actually, I always take the U6 unemployment number and then add 10% to it to get a better estimate of the true unemployment situation. I call the resulting number the "U10". :-D
Posted by: Loveandlight | 02/06/2011 at 05:00 PM