Cooking the books: unemployment claims
I was inputting some statistics into an excel spreadsheet for unemployment claims when it occurred to me: the Bush administration is cooking the books. Not literally, but figuratively. Here’s my logic.
Let’s leave aside whether the unemployment numbers reflect reality or not. But, the fact of the matter is that unemployment claims have been going up as have the number of people on the unemployment rolls. This is a problem for the Bush Administration and the Republican party with a general election coming in November. Bush has been claiming that we are not in recession when even Martin Feldstein, the former Reagan chief economic advisor and the President of the NBER which decides recessions, says we probably are.
So, the question is how to present the economic data in a way that highlights the positives. Enter cooking the books.
First there’s inflation. We all know inflation is spiraling upwards. But did you know the official measure says inflation is only 4.2%? Huh? The government has figured out ways to keep the official number down and deceive the American people. But, not everyone is fooled.
Next enter GDP. The economy is growing, right. Wrong! What is growing is nominal GDP i.e., unadjusted for inflation. In Q1, this number grew an annualized 3.5% over the previous quarter. Now, if CPI, the already doctored inflation rate is running at 4.2%, how is that the economy actually grew last quarter? Well, it just so happens that the BEA, which reports GDP uses a different inflation number than the BLS, which reports actual official inflation. Do you think that number is higher or lower than the official number? It’s lower, silly — 2.6% on an annualized quarterly basis. So, that’s where 0.9% growth comes from.
Now, it’s unemployment claims’ turn. The Democrats have put forward a bill to lengthen the maximum period one can collect unemployment insurance in this recession from 6 months to 9 months. President Bush has said he would veto this bill and the Republicans in Congress are against it. The Democrats, sensing a good political issue, informed all the newspapers in the congressional districts of those who voted no that their congressmen had done so. In an election year when the economy is soft, you would think Republicans would vote yes. Are they committing electoral suicide? No.
See, the continuing claims numbers are rising rapidly. If we extended the benefits 3 months, that would cause claims and the official unemployment rate to shoot up dramatically right before the election. That ain’t so good for getting re-elected if you’re a Republican. What to do? hmmm…
Vote no to extending claims.