Despite the recent Department of Labor statistics regarding an increase in output from factories and the manufacturing as well as the latest drop in the unemployment rate from 9.0% to 8.6%, one shouldn’t start celebrating just yet. President Obama is touting the latest news that his economic agenda is working and for Americans not to give up but keep persevering and making personal sacrifices. Of course, president Obama will take credit for any good news about the economy, even if it is just a slight bump in the positive column. Now, he and former President Bill Clinton are encouraging the creation of well over a hundred thousand “Green” Construction jobs that involve painting roofs white on all residential houses and public buildings to make them more energy efficient. What bolsters this ambitious plan are perhaps those surprisingly lower unemployment statistics as well as better-than-expected “Black Friday” sales figures, but numbers can be misleading. For one thing, the “real” unemployment rate is much closer to between 12% and 15% because individuals who have been fired, quit their jobs or their UI claim is in dispute are not included in the data; as well as the people who have already exhausted their benefits and the many who have just simply given up looking for work altogether. Also, it is believed that the 315,000 reduction in the workforce is probably due to retirement; as opposed to any other significant factor.
Now, as far as the early holiday gift on “Black Friday” to the nation’s retailers from consumers who spent more money in 2011 than in the past two years, merchants shouldn’t uncork the bottles of champagne just yet. Lackluster or slumping sales has forced many merchants and stores to offer deep discounts by slashing prices 50% or more, resulting in lower margins, usually below their cost, on average, just to make a sale. When all the accounting is done it will show that a few of the more well known stores actually made a profit because they lowered their target for the year-end quarter, but the majority of others will do poorly and lose a substantial amount of money. President Obama wants Congress to not let the Bush tax cuts expire because, once again, the ‘detached-from-reality’ political thinking is that this is the same thing as a rebate, of sorts, and people will spend this extra money on big ticket items to stimulate the economy. The thing is though, the Congressional Budget Office or some other governmental agency should conduct a study in conjunction with the IRS and issue a report on how much the average American taxpayer or family will save because in an economic downturn because most individuals who are struggling to keep a job and hang on to their homes will use any and all discretionary income to pay for necessities like utility bills, groceries and medicine and not on other non-essential goods or services. And to wrap this up with a final point, it is like the old adage, “A recession is when everybody else is out of work, and a depression is when you are out of work.”
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December 2, 2011
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