Economics 101

This is a short lesson in Economics.  I’ll give you the bottom line now, so if you’re in a hurry you can just Tweet the article and post it to you Facebook so your friends don’t miss out.

Don’t believe a damn word the government says about the economy.  Not one.

Yesterday was the first Friday of the month.  That means the “unemployment statistics” came out and the administration got to talk about the “recovery” of the economy.

Here are some basics you need to know in order to understand the shell game that government spokespeople use to delude the low information public.

  1. It takes between 125,000 and 150,000 new jobs in the private sector every month just to keep up with new people coming into the workforce.
  2. The government uses the “U3” index from the Bureau of Labor Statistics to report unemployment.
  3. The unemployment rate is calculated by dividing the number of people “looking for work” by the number of “people in the workforce.”
  4. If you are not employed and haven’t looked for a job in the last four weeks you’re not “in the workforce.”  Think about that one.

Let’s stop here for an example.  Say 150,000 new people come into the workforce in March but there are only 88,000 new jobs for them.  Simple math would suggest that the rate of unemployment goes up because 72,000 people are added to the unemployment rolls.  Not if 600,000 people stop looking for work, because then there are fewer number of people “in the workforce” and the unemployment rate magically goes down.  Even though there are more unemployed people.

Government accounting.  Try that in your business, you go to jail.

88,000 new jobs.  The consensus of economists was that we would add 200,000 new jobs.

OberkleThe President’s message is that the economy is turning around.  Tell that to the 663,000 people who left the workforce because they couldn’t find a job.  LAST MONTH.

Tell that to the 9,460,000 people who have left the workforce since the President took office.

Here’s an economic snapshot of some legislation that John McCain, Lindsay Graham and the Democrats are pushing.  It’s called “Amnesty for Illegal Aliens” or something along that line.

McCain’s life’s work will dump eleven million (or maybe it’s 20MM) currently illegal aliens into the official workforce count.  Remember that 88,000 new jobs from March?  You get the idea.  They’re going on welfare.  And food stamps (if they aren’t already) and to hell with the requirement that prior to being legally allowed to enter the country you have to prove that you can support yourself.  Thanks John.  Thanks Lindsay.

The President is already blaming “sequestration” for the low jobs number.  And the Republicans who won’t let him spend another trillion or so this year and who are objecting because he wants to raise taxes AGAIN on the productive sector of the nation.

Hint.  It’s not any of those things, and it’s not going to be any other excuse he comes up with.  The problem is, in no particular order, Obamacare, regulations, and a constant drum beat to raise taxes.

Obamacare is – and will continue to – eliminate full time jobs in favor of part time jobs.  It will raise health insurance premiums probably another 50% in the next two years and that will be paid for by you.

Regulation is raising the cost of energy and suppressing new business formation.  In the last month the founders of both Home Depot and Federal Express said they could not start their businesses in today’s regulatory environment.  You can look for your electricity bill to double in the next couple of years as Obama’s EPA has their way.

Taxes?  Raise taxes on the productive sector and you have less money to invest in new or expanding business.  The President doesn’t understand that because he’s never even worked for a business let alone owned one.

So, when you hear happy talk from the administration, don’t believe it.  I doubt even they do, but I’m probably giving them too much credit.

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