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by Rainer Rupp
Friday, Aug. 20, 2010 at 10:29 AM
The Federal Reserve pumped far more than a trillion without stimulating the economy. 250,000 new jobs must be created month after month to reach the 4.7% unemployment rate before the crisis. 125,000 persons stream on the labor market every month.
CRISIS AS PERMANENT STATE
Unemployment in the US is downplayed with statistical tricks. No recovery of the economy in sight
By Rainer Rupp
[This article published in: Junge Welt 7/17/2010 is translated from the German on the Internet, http://www.jungewelt.de/2010/07-17/025.php?print=1.]
In the US the number of employees declined in June 2010 for the first time in 2010. 225,000 persons hired temporarily for the big census lost their livelihood. The approval of Americans in President Barack Obama as a crisis manager, particularly his measures to stimulate the economy like the 7 billion state spending package and diverse tax relief, has largely fizzled out. According to the most recent polls, only four of ten US citizens are satisfied with Obama’s job performance.
The political will for a new economic package is lacking in the US Congress. The Federal Reserve (Fed) is also at a loss as to what to do next. Since the beginning of the crisis, it has left the key interest rate at zero percent. In addition, it has pumped far more than a trillion dollars without stimulating the economy. A self-sustaining upswing, increasing production, services, export and consumption is not in sight. Thus the task set by Obama cannot actually be accomplished. Over 15 million officially registered unemployed need wages and bread. More than half of them lost their lobs through the crisis. At the same time 125,000 persons stream on the labor market every month, which is primarily due to the demographic development. Few of them appear in the official unemployment statistics on account of the “reforms” of the statistical accounting methods.
Despite the continuous destruction of jobs, the official US unemployment rate in June 2010 fell incredibly from 9.7 percent in the previous month to 9.5 percent, which Obama tried to sell to the public as “great progress.’ However a cursory glance at the numbers shows that statistical tricks were performed here to maintain the fairy tale of economic recovery.
The decline in the official unemployment rate was almost exclusively due to the fact that nearly two million Americans “left the working population” in the last months according to the official statement. This means they simply gave up registering as job-seekers at the unemployment office after sometimes 250 unsuccessful applications or fell out of the statistics for other reasons. Statistics will be “reformed” again and again in the coming years to cover up the real extent of unemployment.
All this can be discovered in the so-called U6 tables of the US Labor Department. Presently 26 million US citizens are unemployed, which amounts to a rate of 17 percent. The number of average weekly working hours that fell to 34.1 hours in June is also revealing. This means a large part of workers have only part-time jobs, which as a rule have a lower pay than full-time positions.
Other studies show the new jobs created in the course of the economic packages pay considerably less than the jobs destroyed by the crisis. Thus an enormous loss in purchasing power results for large parts of the population that together with the economic loss in value in real estate stands in the way of a lasting increase of private demand. The latter is very important for a self-sustaining economic recovery.
ENORMOUS JOB NEED
Before the outbreak of the crisis, the official unemployment rate was 4.7 percent. To reach this mark again, 250,000 new jobs must be created month after month for the next five years, half of them for the age groups moving to the labor market and the others for those dismissed in the course of the crisis. In early August 2010 the Federal Reserve admitted the economy will only recover very hesitatingly in the next five years. A job miracle is in the realm of utopia.
Without flinching, US congressional representatives, most of whom are millionaires, recently approved additional funds for the expensive war in Afghanistan that has already cost 0 billion. At the same time extending assistance for long-term unemployed was actually canceled. These sufferers will also lose their health insurance protection. Two million workers are affected. Soup kitchens and homelessness threaten them and their families as soon as their modest savings – if they exist at all – are used up.
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