And Bernanke Didn't Think Unemployment Would Reach 10%

Friday’s unemployment report from the Bureau of Labor and Statistics is anything but a green shoot. The official U-3 unemployment number is 10.2%. The broader and more comprehensive official unemployment number, the U-6, is at 17.5%. The U-6 counts all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, and all the people who dropped off unemployment benefits because their unemployment benefits ran out. John Williams at Shadowstats.com suggests that real unemployment is actually running at 22%, which, by our calculation, is approaching Great Depression unemployment numbers.

The unemployment report may come as a surprise to those who have been following the Obama administration and mainstream economists like Paul Krugman. Here are some choice quotes from those we’ve entrusted with our economy:

President Obama (February 13, 2009):

"That’s a story I’m confident will be repeated at companies across the country — companies that are currently struggling to borrow money selling their products, struggling to make payroll, but could find themselves in a different position when we start implementing the plan,” Obama said. “Rather than downsizing, they may be able to start growing again. Rather than cutting jobs, they may be able to create them again.”

David Axelrod, Senior Adviser to President Obama on whether the stimulus plan will keep unemployment from reaching 10 percent (February 15, 2009):

That’s our hope – that’s our hope. There’s no doubt that without it, that’s where we were looking: double-digit unemployment. That’s what we’re trying to forestall.

Nobel Prize Recipient and Economist Paul Krugman on the benefits of trillion dollar deficit spending (January 21, 2009):

I’m looking for the unemployment rate. I want to see the unemployment rate stay safely below 10 percent, which is by no means a foregone conclusion. And I want to see it coming down notably next year.

Larry Summers, Lead Economic Adviser to President Obama (January 18, 2009):

I don’t think so. I think while we’re going to see some substantial job losses, frankly what is important about the president’s program here is that it is going to contain what would otherwise be just a vicious cycle, people spend less, therefore they earn less. We’re going to contain this problem.

Ben Bernanke, Chairman of the Federal Reserve testifying before Congress’s joint economic committee (May 5, 2009):

Currently, we don’t think it will get to 10 percent. Our current number is somewhere in the 9s.

So far, no good. The policies recommended by Messers Krugman, Axelrod, Bernanke and Summers seem to be having the opposite of the intended effect. Tens of thousands continue to lose jobs, credit continues to contract, spending continues to contract, and personal credit & mortgage delinquencies are on the rise.

Luckily, America has a President in office who is changing the way Washington works from the inside out and is holding strong to the commitment he made in April of 2008.

Presidential Candidate Barack Obama (April 3, 2008):

Today’s job news is the latest indicator of how badly America needs fundamental change from Bush-McCain policies that have been devastating for working families and catastrophic for our economy….

Our economy is struggling because the American people are struggling, and simply bailing out investment banks on Wall Street will not help Main Street.

Thank goodness that there’s at least one elected official in Washington that doesn’t believe in bailing out investment banks on Wall Street to help Main Street!

Recent developments in the economy suggest that the recession is over, recovery has started and for the consumer, it’s business as usual throughout America’s shopping malls.

All sarcasm aside, we ask our readers to consider recent statements from the public and private sector in regards to the economy. Are things really getting better? Given what we’ve been told so far, is it prudent to put our trust into the very officials who have gotten us to where we are today?

Sources and Hat Tips:

• For a more detailed breakdown of the (Un)Employment report, we recommend Karl Denninger’s article Employment Report: OUCH
• Hat tip to Mish for the U-6 definition provided in this article
• Visit Shadowstats.com to view John Williams Charts on U-3, U-6, and SGS Alternative unemployment statistics

Comments

[Steve in Greensboro]

Don't worry, Mr. Slavo. All we need to do is more of what we have been doing: print more money and have another stimulus or two. Plus, let's raise taxes by socializing medicine, taxing carbon dioxide emissions, allowing the Bush tax cuts to expire in 2011, imposing a VAT, etc. Plus, let's impose massive tariffs like the G-20's "balanced trade" plan. Paul Krugman thinks these are all good ideas and he has a Nobel prize -- in economics!

Happy days are here again!

2009 Nov 08 06:24 AM

[damienhaas]

Bernanke is wrong about the unemployment, I wonder whether he will be wrong about inflation too......

2009 Nov 08 06:45 AM

[resetplz]

That's OK, Republicans didn't think Social Security or Medicare would work...and Bush didn't think WMDs wouldn't be found in Iraq.

Jobs you can recreate; lives you can't.

2009 Nov 08 07:10 AM

[David Sullivan]

Unintended consequences of big government brought us here. Subprime lending is still the law of the land.

And they say the twelfth century was the age of faith.

2009 Nov 08 08:15 AM

[Rdan]

I am afraid your interpretations come up short, Mike. As a political shout out it is okay, but using Jan and Feb quotes isn't useful...please avoid using simple rhetoric and add thought to the piece.

2009 Nov 08 08:18 AM

[Dave Lewenz]

While fortune 500 companies have abated layoffs expect thought’s that are consolidated, which we will see a lot more of, IE Pulte – Centex, just announced 800 lay offs due to merger. Wait to you see the Black and Decker numbers which could be around 5 thousands, The vast majority of unemployment entries into the market are now small business that are closing their doors. This could be a spiraling effect that no amount of government intervention can prevent unless banks start loaning again. We could see 15% by end of 2010


On Nov 08 06:24 AM Steve in Greensboro wrote:

> Don't worry, Mr. Slavo. All we need to do is more of what we have
> been doing: print more money and have another stimulus or two. Plus,
> let's raise taxes by socializing medicine, taxing carbon dioxide
> emissions, allowing the Bush tax cuts to expire in 2011, imposing
> a VAT, etc. Plus, let's impose massive tariffs like the G-20's "balanced
> trade" plan. Paul Krugman thinks these are all good ideas and he
> has a Nobel prize -- in economics!
>
> Happy days are here again!

2009 Nov 08 08:24 AM

[Tonda]

U-6 is incredible. Question is how much higher does that number have to go. As for blaming Obama, he could answer without his stimulus program, the numbers would be worse. Of course, there is no way of proving stuff in the realm of what might have been. Just to let it all in the hands of the "Free Market", which just slapped average Joes silly, doesn't seem so prudent. Not saying giving the government a bigger role is a panacea as well. Just no good options out there for a society whose juice comes from selling its citizens into peonage.

2009 Nov 08 08:25 AM

[Gary Pass]

I have been in business 30 years and We will not reopen next year. The stimulus package to the banks has all but finished most of the thriving small shops in my area and now this health plan is the end. I know at least 10 other businesses in my small circle that will do the same .

2009 Nov 08 08:26 AM

[sequoiatreehugger]

Peter Schiff was right.

2009 Nov 08 08:46 AM

[Oldfoxbob]

The Republican party stands for low or no tax's on the rich...Big oil company's can make more and more money with no rebate to the little guy...no insurance to the poor. No welfare for the poor, no unemployment benefits to the unemployed. Higher tax's on the lower income people. Hummmmm....that means no money to buy goods that the rich are producing. No one who gets sick can get well enough to return to work. Seems like a viscous circle to me. Yet the Democrats are pushing for more socialism...What we need is a good dictator for a 4 year stint and he has to be a good business man to get this country back on track. Throw the illegal aliens out, or in jail. Make those here legally speak English! Create jobs by creating government projects like new Dams, New Roads, New Libraries, New Schools etc. Make Congress ( both houses) have the same retirement plan as the rest of us have ( social Security) Make them have the same health plan as the poor have ( medicare and medicaid) and tax the hell out of the rich bast***s that are ruining this country. THEN we will have a good country once again. May be I should run for Congress to get this type of crap passed into law. What do you think?

2009 Nov 08 08:47 AM

[psantos]

What possibly has been accomplished to allow small and mid-sized businesses to flourish and creat employment opportunities for America? Obama is correct bailing out Wall Street has shown no advantage to the average american, as trillions of stimulus dollars were wasted upon big banks that are STILL tied to trillions in derivatives and Credit Default swaps and similiar toxic assets. We can't even print enough money to save banks such as BoA or Citicorp, so why even try??

Americans are drowning in debt as stimulus bloated banks, continue to give big Government the finger at the same time beating the taxpayers into submission with no credit, absurd rates on existing accounts, and no loan modifications. What has been accomplished, NO JOBS, FORECLOSURES, NO CREDIT FOR SMALL BUSINESS. While banks such as Goldman Sachs run the country, thanks to our taxpayer funded bailout.

2009 Nov 08 08:48 AM

[shankfisher]

The worst is yet to come. Folks need to be "investing" right now in real assets they can buy outright (land, livestock, a tractor, etc.) and in food. It's not going to get better any time soon, and food prices are going up rapidly. Get out of the cities. Get a small farm, grow potatoes.

2009 Nov 08 08:53 AM

[bottoms-up]

The statistics used by the government to not take into account the dysfunctional economy we have today. When you look at the numbers in the consumer spending-service sector, this can only be supported through abusive lending policies and/or asset bubbles.

The computer models use a "balanced economy" for projections (ie, service sector, manufacturing sector, government sectors, etc.), not this 75 percent consumer spending garbage that we have today, plus "building and selling homes to each other."

There is absolutely no reason why, without the unsustainable infusion of abusive credit (the drug of a consumer-based economy) from banks or government that goes on endlessly, that unemployment can't hit 30 percent or higher. The feedback loop will be horrific and I think we are seeing the start of the process now....

If you want to do something interesting... Do this simple test... Take unemployment reports from each of the states and territories, then divide them. Hint: The answer is a lot more than the U.S. Government reports... Em....

2009 Nov 08 08:58 AM

[averal]

How many jobs were created by using tax dollars to give multimillion dollar bonuses to bankers and wall street? If that money had been used to address problems with infrastructure, it would have created thousands of jobs and done tangible measurable good for the country.
Where is the accountability for the decisions being made?

2009 Nov 08 09:02 AM

[Meltdownman]

video.pbs.org/video/13...

The last 10 minutes is the most sorrowful.

The Meltdownman

2009 Nov 08 09:02 AM

[long_on_oil]

My God, we have been through this once before when Reagan got elected. For Petes sake politicians, swallow your pride and do what Reagan did. His plan set us on a path to recovery and prosperity that lasted over 20 years. We all know what he did now all we have to do is replicate it.

2009 Nov 08 09:05 AM

[americanincanada]

The problem is that the crowd in charge wants to do what we all want to do, namely create jobs, but they have no idea how that should be done. You could get a lot of the unemployed people to start their own small businesses if you had a program that encouraged that, say with tax free status for a number of years for small businesses. Tax incentives would work for larger businesses as well. Anything but supporting people with no work hoping that eventually things will turn around, postponing needed down sizing decisions by states, or hiring people for government jobs that don't need to be done.

2009 Nov 08 09:13 AM

[novelator]

Bernanke is, like Obama and Pelosi, the front man for folks like George Soros who are engineering the economic collapse of this country. Soros said once that America was the stumbling block to one-world governance. So, his, and others, plan is to take down America from within. And yesterday, the 220 yay votes on that massive healthcare takeover were 220 votes in favor of George Soros and the Bilderberg Group--these are at least 220 representatives/traitors to America that have been bought by Soros, et al.

The question now is what are we going to do to stop this?

2009 Nov 08 09:16 AM

[Ferdinand E. Banks]

Funny long_on_oil, but I make a point of telling my students that Reagan was the dumbest president in the history of the United States. He also ruined the lives of hundreds of thousands - or maybe millions of Afghans.

And author, read some economic history. There is no relation between the 'great' depression and what we have now. And do you know something, there never will be.

2009 Nov 08 09:17 AM

[americanincanada]

One small manufacturing business I have an interest in is hanging on, but we have let go almost all of the employees and we are back to what we were as a startup fifteen years ago. No available financing is the culprit, even more than decline in revenue. Owners can't help either because credit lines they may have had have been cut or have disappeared. Interest rates on credit card purchase balances rising from 9% to 30% have hurt short term owner support as well. I have not seen any aspect of a stimulus package that has addressed financing issues.


On Nov 08 08:26 AM Gary Pass wrote:

> I have been in business 30 years and We will not reopen next year.
> The stimulus package to the banks has all but finished most of the
> thriving small shops in my area and now this health plan is the end.
> I know at least 10 other businesses in my small circle that will
> do the same .

2009 Nov 08 09:24 AM