Wall Street: Don’t Let Facts Get in the Way of Obama’s Birthday Parties

05 Aug, 2011 by Jane Jamison

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Cross-posted on UNCOVERAGE.net

The pantie-wetters on Wall Street were craving just one good thing, anything, before heading off to double martinis on Friday….so the Obama administration obliged by monkey-wrenching a tiny decrease in unemployment.

That’s a lie, of course.

“…..according to tweets by Jim Pethokoukis who is a Money & Politics columnist and blogger for Reuters:

“Decline in July jobless rate was entirely due to a drop in the labor force, not an increase in share of workers w/ jobs”

This one is even more revealing:

“11.7% = Unemployment rate if active labor force was as big as it was when Obama took office. |The Big Shrink”

So what we have here is what we’ve been seeing all along, which is reductions in the labor force when people have been deemed to quit looking for work. And resetting the labor force to what it was when Obama took office, which is very fair in my opinion, yields an unemployment rate of almost 12%.”

Tyler Durden at Zero Hedge says a little-noticed but very significant fact is, people are now unemployed for longer periods of time:

“……average length of unemployment, just hit a new all time high of 40.4 weeks in July, up from the previous record of 39.9 in June. Someone should tell the average American who is rapidly approaching one year in average unemployment that the stock market soared on good payroll news. They will be delighted.”

The somewhat “truer” “underemployment” rate, is 16.1%.

After the market closed came word that even the Obama-loving Goldman Sachs is now lowering GDP projections:

“After looking at today’s anemic unemployment report, Goldman Sachs drops this H-bomb on the Obama campaign:

We have lowered our forecast for US real GDP growth further and now expect real GDP to grow just 2%-2:½% through the end of 2012. Our forecast for annual average GDP growth has fallen to 1.7% in 2011 (from 1.8%) and to 2.1% in 2012 (from 3.0%). Since this pace is slightly below the US economy’s potential, we now expect the unemployment rate to be at 9:¼% by the end of 2012, slightly above the current level.

2. Even our new forecast is subject to meaningful downside risk. We now see a one-in-three risk of renewed recession, mostly concentrated in the next 6-9 months. There are three specific issues that concern us. First, a worsening of the European financial crisis, and a failure of European policymakers to respond adequately, could lead to a further tightening of financial conditions and credit availability, which would worsen the economic outlook globally. Second, our forecast assumes that the payroll tax cut–currently scheduled to expire at the end of 2011–is extended for another year, but if that failed to happen the fiscal drag in early 2012 would increase significantly. Third, increases in the US unemployment rate have historically had a tendency to feed on themselves, and this could happen again.

“The consensus used to be that President Obama might be OK if the jobless rate fell below 8 percent by Election Day. That seems increasingly unlikely. The economy is, at best, in slow-growth mode, just churning and churning, creating few jobs. Comparisons to President Reagan’s 1984 “Morning in America” campaign are looking ever-more ridiculous. Under Reagan’s tax-cut driven recovery, unemployment fell from 10.8 percent in December 1982 to 7.2 percent by Election Day as the economy grew 4.5 percent in 1983 and 7.2 percent in 1984. In fact, Jimmy Carter’s 1980 campaign might be the better comparison. The unemployment rate jumped from 6.0 percent in December 1979 to 7.5 percent on Election Day 1980 as the economy shrank 0.3 percent.”

For the record, the president says he is “totally focused” on creating jobs [ummmm he just celebrated 5 birthday parties in multiple cities in 3 days….?] and will do something first thing in September [last we checked, that is 3 weeks from now] to do the same things he has done for three years which haven’t worked:

“So, when Congress gets back in September I want to move quickly on things that will help the economy create jobs right now. Extending the payroll tax credit to put a thousand dollars in the pocket of the average American worker. Extending unemployment insurance to help people get back on their feet. Putting construction workers back to work rebuilding America.”