Saturday, October 6, 2012

Quick Hits - October 5, 2012

Former GE Chairman and CEO, Jack Welch, is still held as one of the foremost modern business leaders, and he shared on Twitter his disbelief around the September jobs numbers released by the Department of Labor early Friday morning.

A consensus of 25 economists polled by the Wall Street Journal predicted a September jobs report that would show 113,000 new jobs created - an anemic number and in line with the dismal job creation numbers of the summer of 2012, and fitting an economy that is sputtering along at a 1.25% - 1.3% annualized GDP growth.  With that number, they predicted at best an 'official' unemployment rate of 8.1% and at worst an 'official' unemployment rate of 8.2%.

What was released was widely seen as just another blatant attempt by the Obama Administration to 'cook the books' in order to make the numbers appear far better than reality in order to spark the President's reelection effort.

The base numbers, according to the Department of Labor, saw 114,000 new jobs being created in September which then led to an 'official' unemployment rate of 7.8% - a drop of three tenths of a point.

This raised many questions particularly since 114,000 new jobs being created is insufficient to cover even the population growth during the month of September.

Throughout the media and blogosphere, questions were raised over these numbers - and the fact that they do not cleanly reconcile.  MSNBC's Joe Scarborough raised questions about the odd contradictions of the report.  Other bloggers, like Ed Morrissey at Hot Air, took the time to dig deeper into these numbers in an effort to try to explain the contradictions - not defining them as 'cooking the books' but the effects of a real outlier poll conducted by the Department of Labor in the household survey that is used to build the 'official' unemployment rate.

There are clearly issues with this jobs report.  But one of the things about lying and cooking the books - unless one wants to be caught in their lies or cooking the books, once they start down that path, they are committed to that path forever.  Any deviation or move from that path will expose their previous shenanigans.

President Obama, even without his dismal debate performance of Wednesday night, needs to receive good economic news.  That means he needs to show that his agenda and policies are growing the economy.  Thusfar this year, all that the numbers are showing is an economy that is sputtering - while still growing (barely), it is slowing down significantly from 2011's numbers.  The economy is not moving in the right direction.

But with these numbers, as the President proclaimed loudly on the stump in Virginia this afternoon, the unemployment level is now back to the level it was when he took office on January 20, 2009.  And he's back to adding together all of the monthly job creation numbers from July 2009 to present to proclaim that he's created 5 million + jobs - which we've and others have demonstrated is a canard.

The Department of Labor uses two different surveys that it conducts to generate its jobs report.  One is the payroll survey - a survey of companies to determine how many new jobs are created.  This is the survey that generated the 114,000 news jobs being created.

The second survey is a survey of 60,000 households across the United States by telephone which is used to define who is working, who is looking for a job, and who has given up looking for a job.  This survey becomes the primary factors behind the U-3, the 'official' unemployment rate, the U-6, the unemployment rate which does not include those who are 'underemployed', and the labor participation rate - which is the percentage of the total US population which is in the 'official' labor force.

According to September's household survey, an astounding 873,000 jobs were created.  This is clearly an outlier number.  We've not seen a number like this since 1983 when the economy was in the midst of the Reagan recovery and the GDP was soaring at 9.3% growth.  Today's GDP, to remind you, is 1.3%.  A healthy economy is seen around 4%.  This is not a healthy economy.

But if we look even deeper into this survey, we see even more problems that raise valid questions that shine the light of reality around the perception that is being foisted on us that things are better than they really are.

Of these 873,000 jobs, 582,000, almost exactly two thirds on them, are part-time jobs - without benefits and in the vast majority of the cases at far lower income levels than what the people were making before. [Zerohedge notes the other cases of odd symmetries within these numbers here.] This reflects a huge number of people who are taking whatever jobs they can, part-time jobs, to help bring in   income as they lose their federally extended jobless benefits.  It also reflects a weak job market - where employers are hesitant to bring on full time workers.

But even with that explanation, the 873,000 new jobs created as evidenced from the household survey still doesn't reconcile with the 114,000 jobs created via the payroll survey.  The numbers look even more out of skew when we look even deeper and see that about 100,000 of the new jobs created came from the public sector - new hiring by state and federal government - which highlight an even more dismal private sector employment picture.

In fact, in another number that runs contrary to the rest of the report, the U-6 number, the unemployment rate which includes those underemployed, did not match the three tenths of a point drop of the U-3 number. The U-6 number, despite the 114,000 'official' jobs created, or the 873,000 jobs created via the household survey, remained level at 14.7%.  It doesn't fit....and still is showing one of the effects of previous 'cooking'.

In the past, one of the ways that the 'official' unemployment number was suspected of being cooked was because of the regular and relatively large drops in the labor participation rate that defied cogent explanation.

Today, the labor participation rate is 63.6%, up .1% from last month, but substantially lower than the labor participation rate was on January 20, 2009.  In fact, the labor participation rate is at the lowest levels since 1981.  That is not a sign of a vibrant economy in the midst of a recovery.  It is, however, the sign of an economy and economic policies that over the past 39 months since the recession ended (June 2009) has millions remaining unemployed / underemployed and far exceeding the dismal numbers of jobs these policies have created.

So, how good is the Obama economy?

If the labor participation rate today was at the level it was on January 20, 2009 when the President took office, the 'official' unemployment rate would be 11.1%.  That is the apples versus apples comparison.  That is the real record that the President has to run on, or more accurately, run away from.

This is why the President's message is locked on the fiction of 'creating' over 5 million new jobs, of ending 43 consecutive months of an 'official' unemployment rate of over 8%, of achieving an 'official' unemployment rate equal to that of his first month in office (45 months to bring us to the level we were in the midst of a severe recession), and ignoring that there a 5+ million fewer people in the official labor market today than were in the market when he took office.

The President's campaign announced today that they brought in a record setting $150 million in campaign contributions during the month of September.  Within the details of this announcement comes the unsurprising fact that the bulk of these donations were small donations, an average donation of $53, from credit card contributors.

This is similar to the President's 2008 campaign where accusations and complaints of campaign fund raising fraud were raised by new media - and largely ignored by the sycophants in the mainstream media.  Today, as in 2008, the Obama campaign has zero controls on the donations via credit cards - no verifications of the name or billing information to ensure that the contributor is legally able to donate.  In 2008, tens of millions of direct contributions were made to the Obama campaign from non-US citizens.  This is happening again - and according to the Washington Examiner, in this election cycle, the illegal actions of the Obama campaign will not be swept under the rug....
According to knowledgeable sources, a national magazine and a national web site are preparing a blockbuster donor scandal story.

Sources told Secrets that the Obama campaign has been trying to block the story. But a key source said it plans to publish the story Friday or, more likely, Monday.
Will this have an effect as the messianic enrapture over Barack Obama continues to fade?  I am doubtful that anyone within the campaign will actually pay a price for their illegal decisions and actions.  But this remains reflective of the arrogance and contempt towards the rule of law that is endemic of the progressive left.

Speaking of arrogance and contempt, Obama Deputy Campaign Director Stephanie Cutter has been demonstrated time and time again as being a pathological liar fully embraced within the concept of the 'ends justifies the means'.  As I've mentioned before, once someone starts lying, they need to continue the lies in order to mask themselves being exposed as a liar.  A true shameless liar will continue even when they know they've been caught - demonstrating both arrogance and contempt.  Cutter did this earlier today as she was asked about the canard repeatedly referenced by Barack Obama during the debate Wednesday night that defined Mitt Romney's tax plan as a '$5 trillion tax cut for the wealthy'.

Cutter – Yes, we’ve been lying all along about the $5 trillion tax cut for the wealthy we’re accusing Romney of pushing…
An esteemed Princeton University Economics Professor, Harvey Rosen, has reviewed the Romney tax / economics plan and the attacks on that plan made by Barack Obama during the debate - and finds many holes in the President's case while also finding the Romney plan 'plausible'...
“If you are lowering the rates the way you describe, Governor, then it is not possible to come up with enough deductions and loopholes that only affect high-income individuals to avoid either raising the deficit or burdening the middle class,” Obama said. “It’s — it’s math. It’s arithmetic.”

Obama was basing his claim on a study by the Tax Policy Center, a project of the center-left Brookings Institution and Urban Institute. But there are at least three critical flaws the the TPC study: (1) it assumes pro-growth tax reform can’t actually produce economic growth, (2) it assumes two tax expenditures worth $45 billion per year are not ‘on the table’, and (3) it assumes tax reform must pay for repealing Obamacare’s tax hikes, rather than assuming that the repeal of Obamacare’s spending will pay for repealing the tax hikes. If one corrects these erroneous assumptions, the math checks out.

As Princeton economics professor Harvey Rosen writes, Romney’s plan would neither require a net tax hike on the middle class nor a tax reduction for the rich under “plausible” growth assumptions.
How much growth is needed to make the Romney plan work?  An annual GDP growth rate of 2.29%.

California continues to get hammered by soaring gasoline prices.  Last Friday when I put gas into my car, I paid $4.09.9 per gallon for unleaded regular.  Today, at the same station, I paid $4.69.9 per gallon - a 60 cent increase in just 7 days.

Overnight, in Los Angeles County, the average gas price per gallon shot up 19 cents - the largest overnight spike ever seen.  Experts as suspecting that prices will soar another $0.60 to $1 per gallon over the next week to 10 days as California is gripped in a major supply shortage of gas.  Costco and other independent stations are closing their pumps down as they can no longer get gasoline in the marketplace - and wholesale prices for what gas is available show we'll see $5.25 - $5.50 prices.

The causes for the supply challenges are a microcosm of what is wrong with the energy policies of the progressives which have controlled California for most of the last two decades - and currently control the Federal Government.

The simple cause is because major elements of California's refining capabilities are down - with one major refinery crippled from a major fire they experienced in August, and another crippled earlier this week by heat related power outages.

These issues expose problems that go far beyond the simple explanation that several refineries are down.  These problems are the real root cause of our problem and extends to the effects of Government regulations and controls which are fundamentally anti-fossil fuels and anti-oil company.

These regulations and controls are intended to prohibit, prevent, and discourage investments into the production of fossil fuels within California.  They prohibit the drilling for oil throughout the state and offshore despite large known reserves easily accessible.  They discourage and prevent the building of additional refining capacity or modernizing / enhancing the existing refineries that exist in the state.  They levy onerous taxes and fees on oil companies for doing business in the state that it discourages any investments because they are unable to make a profit on their business in the state.

In the name of environmentalism, numerous blends of gas are required which complicate the refining process and are incompatible with the blends produced in other states.  So when faced with a supply challenge, these environmental laws and regulations prevent us from buying gas from other states.  This is the time of year when refineries curtail their production of the 'summer blends' and begin to ramp up their production of the 'winter blends' - which are prohibited from sale prior to November 15th.

As Powerline notes in their observations of the California gas crisis....
But President Obama could order the EPA to waive the gasoline regulations, and allow out-of-state gasoline to be transported and sold in California, delivering at least 10 to 20 cents a gallon of price relief, and perhaps much more. Oh, that’s right: Obama wants higher gasoline prices, [and so does the MSM -- Ed] so don’t hold your breath. (Note: After Hurricane Katrina, the Bush administration waived the EPA’s boutique gasoline regulations to assure adequate supplies and stable prices while the Gulf Coast refineries got back up and running.)

Memo to GOP SuperPACs: why not place a few spots on TV in California telling people to “Call the White House: Tell President Obama to give us relief at the pump!”
California is safely a 'blue state' - so there is no real pressure on the President to order the EPA to waive the regulations - just as there is no real pressure on Governor Jerry Brown to do the same at the state level.  Higher energy costs are a necessary effect of the policies of the progressives - an intended consequence of these policies.

The ends justifies the means, particularly with liberal fascism.

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