Friday, February 6, 2015

Good News on Unemployment

Here's the headline I've been waiting for -- for years. From Drudge: "Boom: Jobs Surprise" followed by "But Unemployment Rate Ticks Up" from 5.6 percent to 5.7 percent.

Anyone who knows how the employment market really works knows that the sign of a really good jobs market is when people start returning to the labor force faster than they are actually getting jobs. When that happens the unemployment rate ticks up even though people are getting jobs like gangbusters. And that's what's finally happening.

In the latest BLS Household Survey the Labor Force is up from 156.129 million to 157.180 million, an increase of 1,051,000! But the Employment Level number is up from 147.442 million to 148.201 million an increase of a mere 759,000. When that happens, the Unemployment Rate ticks up.

That is what you call good news. And if you look at the charts you see a steady increase in the Labor Force, starting a year ago when the Republicans in Congress cut back extended unemployment benefits. Employment Level seems to have gone into overdrive a little over a year ago.

It's sad, of course, that the mind-numbed Obama economic policy has been so hard for the folks pitched out of work by the Great Recession. No doubt a Republican president would have done better, because he'd have done less Keynesian foolishness.

But those of us that like to blame Obama for the lackluster economy better understand one thing. If a Republican president had presided over the worst recovery since World War II the media would have persuaded the American people never to let Republicans govern again. Just like they did in the 1930s when incompetent government created the stock bubble and then failed to rescue the financial system thereafter and then slowed recovery with stupid lefty stimulus programs. Talk about a ThreePeat.

So really, if and when the Republicans get into the White House in 2017 with the economy in good shape it means that they can do sensible reforms of the welfare state without being in the "stimulus" phase of the political cycle. Hey, how about those entitlements!

But the next question is the Fed. Will the Fed now, finally, start returning interest rates to normal and let mom and pop savers actually get a return on their savings? And how fast? Remember last time? The Fed started increasing interest rates in 2003 and took about three years to get back to normal, by which time the real-estate market was in a monster bubble.

Anyway, it looks like the economy is at first and ten on the 40 yard line. That's good news for the American people, who have been remarkably patient about the economy for the last six years.

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