Framing the Dialogue

Not So Great Expectations

Many of us have been affected by the economic downturn of the last few years.  I had been unemployed for about half of the year in 2010 and had been paying fairly close attention to jobless numbers and the spin with which officials and media put on the numbers.  Officials use interesting and in my mind deceptive tactics (allegedly) to report the bad news in a more positive light.

The first is that they often cache bad news with phrases like “less than expected” when talking about unemployment claims or “higher than expected” when reporting job creation claims.  What they don’t want to say is that things still stink so they have found a way to frame it as though they expected much worse in terms of unemployment.  Somehow they always seem to put a good light on the numbers under this current administration.

“During the month, there were 114,000 jobs lost because of the Census, while the private sector added 67,000 jobs. According to a Reuters survey, economists were expecting overall employment dropping by 100,000 and private sector hiring up 41,000.”

The next strategy seems to be that officials release bad numbers with the caveats listed above with great fanfare, though obviously not with great pride.  A few weeks later the numbers are “adjusted” and generally these adjustments tell a sadder story.  This happens far too often to be a coincidence.

“The department also revised last week’s data on continuing claims, replacing what had been a drop of 15,000 with an increase of 6,000. That means continuing claims have set records for 19 straight weeks.”

Next come the disclaimers when data shows an upward trend in unemployment claims.  A frequent one used is when the reporting period included a holiday and government offices are closed.  The following period often shows a spike as the backlog is reduced and claims jump, however the news rarely notes the previous better than expected numbers are because people were unable to file their claims.  Another is the explanation of job losses through “seasonal employment” cut backs.  These are all true reasons, but their use as explanations are used to tell the story that they want to tell.  And then they hit you with math.  I don’t mind math, but it seems that they start babbling numbers that just confuse the bottom line.

The last and perhaps the worst is the unemployment numbers used.  Lately you may hear that unemployment is steady or dropped slightly, but it has been close to ten percent for nearly two years.  The number widely reported only tells part of the story.  That number does not include the millions who are out of unemployment and/or cannot find full-time work.  They are termed the “U6” and when you include them in the numbers the unemployment rate is a shocking 16.7 percent.   This excerpt from 2010 explains further;

“The comprehensive gauge of labor underutilization, known as the “U-6″ for its data classification by the Labor Department, accounts for people who have stopped looking for work or who can’t find full-time jobs. Though the rate is still 0.3 percentage point below its high of 17.4% in October, its continuing divergence from the official number (the “U-3″ unemployment measure) indicates the job market has a long way to go before growth in the economy translates into relief for workers.”

Scarier still is the fact that this does not include those who have dropped out of the workforce completely.  Sometimes they just cherry pick the numbers that they want shown.   Here is an example from last year;

“Last Friday, the Labor Department reported that in January the unemployment rate had fallen from 10 to 9.7 percent. The White House claimed that this was positive news that the economy was improving. However, upon closer examination, the Labor Department’s job statistics are seasonally adjusted. Despite the seasonally adjusted unemployment rate falling, Americans lost 20,000 jobs in January. Dr. Anthony B. Sanders, Professor of Finance at George Mason University, claimed that Americans should not get too excited about the Labor Department’s unemployment numbers due to the fact that:  The actual unemployment numbers show an increase from 9.7% to 10.6%.  According to the Labor Department statistics, the actual unemployment rate has increased .9 percent from December.”

Confused?  I think there is a joke about a one-armed economist who could no longer use the phrase “on the other hand.”  So how are we to understand the numbers?  Unless you want to dig through the reports yourself your best bet is to find a source that you trust and stick with them.   This link will take you to a very short article that will help understand some of the numbers and terms.  One thing that is remarkable is that economics accept that unemployment will never really dip below five percent.

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