In a recent Reuter’s headline, it was noted that the U.S. job loss rate was slowing down – ergo, this must be the end of the “recession.” Only 539,000 private industry jobs were cut in April, down from 699,000 in March, however, the unemployment rate was adjusted for 60,000 temporary government jobs created in April – those jobs going to the U.S. Census (ACORN).
In an interesting article on the “unofficial unemployment rate” by the Washington Post, the actual unemployment rate is calculated to be in the neighborhood of 15.8%. Unofficial Unemployment rates are based on the number of American’s who should be working full time, but are not counted in the Bureau of Labor Statistics Report. Apparently, several factors are at play here, but chief among them is the unreliability of reporting unemployment claims. Also noted in the Post Article: “The bureau also cannot count every out-of-work person.”
Therefore, Wall Street is reacting positively based upon false numbers, and although the Obama administration does not feel Wall Street should play a significant role in the U.S. economy, the truth of the matter is that pension funds (affecting the lower and middle classes) are tied to: stocks and bonds. As inflation rises, and those “temporary jobs” created by the Stimulus Act disappear, the Misery Index (a combination of the unemployment rate and the rate of inflation), will be through the roof. Those individuals who are relying on fixed income, (retirees) will be hard pressed to make ends meet.
Government Job stimulus under Jimmy Carter had the same net effect – when the temporary jobs disappeared, the unemployment rate rose, Carter’s out-of-control budget, and subsequent tax increases created what amounted to a “black hole” in the economy. Carter and his simpatico Congress decided to cut the budget – their logic dictated the first cuts to Carter’s budget – Defense. (email for full article) (Obama cuts Defense Spending) Of special interest is that Carter blamed the budget deficit on the previous administration (history again repeating itself), discounting the fact that extra “social programs” and “job creation”, contributed to the deficit - due to the fact that they were a “fix”. With an economy in turmoil and cuts to Defense combined with Carter’s Euro-Foreign Policy - world wide perception was that the U.S. held little power. Carter was responsible for the return from exile in Paris,of his friend, the Ayatollah Khomeini to Iran, which, in the ensuring years, resulted in the taking of American Hostages in that country.
At first, the comparisons between Carter and Obama were based on the assumption that an inexperienced one-term Senator, with a Congress in concert might go the way of the Carter administration over time.
However, since January, there are stunning parallels to both economic and foreign policy decisions between the two men. Those who had lived through the Carter years, especially those old enough to remember their older neighbors forced to dine on pet food (which, at the time, was fairly inexpensive) in order to keep a roof over their heads – based on current economic data and historical trends, may rightly fear the worst is yet to come.
