The Faked Recovery
The statistics we use to measure the economy are collected by the Federal Government, who wants to paint a pretty picture.
I'm looking at the big three today: Unemployment, Gross Domestic Product and inflation.
4.5 percent unemployment is what you would expect to see when people are changing jobs relatively frequently to chase new and better opportunities. Any lower than that is considered a labor shortage, which I honestly consider to be a good thing. Who doesn't want to be a scarce commodity that people are fighting over?
Anyhow, the problem with the current figure of 9.1% unemployment is this:
In 2006, there were 152.2 million in the labor force, 7.1 million unemployed, and 300 million people. Thats 145.1 million jobs.
In 2011, there are 153.7 million in the labor force, 14 million unemployed, and 312 million people. That's 139.7 million jobs.
So, twelve million people have showed up in the past five years, but only a million or so have added to the labor force. That being said, you are only considered part of the labor force if you state that you have actively looked for a job in the past six months, or already have a job. The Feds do not count people who have given up.
A slightly larger group of people is competing for a smaller number of jobs, while the population has grown significantly. If the same percentage of the population were looking for jobs now as in 2005, we would expect to have a labor force of 158.25 million people.
This would give us 12.3% unemployment instead of 9.1% percent. That's why it doesn't feel easier to get a job, even though government unemployment statistics are going down. The number of slots is growing slower than the number of people that need a job. Thats also called rising unemployment.
The gross domestic product in 2007 peaked at $14.3 trillion in 2010 dollars before sliding. In 2010, it was supposedly $14.6 trillion in 2010 dollars. "In 2010 dollars" is the critical statement here. Since it is corrected for inflation, this shows growth, right? Maybe.
If I had 100 dollars in 2005, and I have 110 dollars in 2010, I picked up 10% on paper. If inflation was 20%, I lost 10% of my wealth. But if the Feds lie and say inflation is 5%, it looks like I got 5% richer when I actually got 10% poorer. I think this is what's happening.
The Feds use all kinds of illogical tricks to make inflation look lower than it is.
For example, if an iPad 2 has twice the speed of the original, but the price stays the same, its price is considered to have dropped by 50%. If the price of a car doubles, but it has more power and better safety features, the price didn't really go up!
Food is not considered in inflation statistics, and neither is gas, both of which have been increasing steadily.
When home prices were going through the roof, this was not considered to be increasing the cost of living. Instead the Feds chose to look at rental income from houses, and as long as this stayed the same, housing was considered to cost the same, even if property prices tripled. Now that we are on the other side of the coin, dropping housing prices are considered to be making living cheaper, even though people's mortgages don't get any smaller.
As long as you don't eat, drive or live anywhere, and the iPad 2 makes you exactly twice as happy as the original, the government inflation figures are correct.
Generally speaking, unemployment statistics are a Big Lie, and Gross Domestic Product doesn't mean anything because inflation is a Big Lie.
It's a fake recovery!