by Matt Lacy –
Criticism continues to mount over last week’s unemployment numbers which are now below the eight percent benchmark considered a hindrance to an incumbent president’s reelection.
It has long been noted that no post World War II president has ever been re-elected with unemployment above the eight percent mark. Now just a few weeks before the election the Bureau of Labor Statistics has said creating just 114,000 jobs has lowered the unemployment rate to 7.8 percent, its lowest point in 43 months.
However, the data used to arrive at the number appears to be contradictory, prompting some to question how the BLS arrived at the data.
The BLS noted that the economy created just 114,000 new jobs, however they say the number of people unemployed dropped by 456,000 which would suggest that every job created employed four people. It was revealed that the numbers also came about by counting those in part time work as being employed.
However, the U-6 number, which lists those underemployed and the unemployment number did not move, but instead remained at 14.7 percent.
Economists have often said the economy needed to create 1500,000 to 200,000 jobs just to remain even. Given this, the creation of only 114,000 jobs dropping the rate three percentage points was met with skepticism.
Former General Electric CEO Jack Welch said in a tweet that the numbers were “unbelievable.”
The Obama campaign warned it was “dangerous” for Welch to be criticizing the government’s numbers.
Senior campaign advisor Robert Gibbs said on NBC’s Meet the press “The notion, quite frankly, that somebody as well respected as Jack Welch would go on television and single-handedly embarrass himself for the entire day of Friday by saying somehow that these statistics are made up … it’s incredibly dangerous,”
Since then he has doubled down on his statement saying in a Wall Street Journal column that the large dip in the numbers were “downright implausible.”
He noted for the rate to drop by as large amount as it did the economy would have to be growing at a breakneck speed and there is no evidence this is happening. He went on to defend his position telling Fox News that 25 of the country’s top economists predicted a job creation rate similar to what the Bureau of Labor Statistics reported, but instead said the unemployment rate would remain around 8.1 or 8.2 percent.
Critics had more reason to be suspicious after it was revealed that two of the economists at the BLS are donators to the president’s reelection campaign and other Democratic causes. One of the donors, Harry Frazis, has donated over $11,000 to the DNC and Obama over the past three election cycles.
Criticism of the unemployment numbers did not just come from the right. Joe Scarborough also questioned the numbers saying they “did not make any sense” and they did not add up.
Republican presidential candidate Mitt Romney noted that the main reason for the drop in the numbers was the government has stopped counting people who have given up looking for work.
The reason it’s come down this year is primarily due to the fact that more and more people have just stopped looking for work,” he said. “And if you just dropped out of the work force, if you just give up and say look I can’t go back to work I’m just going to stay home, if you just drop out all together why you’re not longer part of the employment statistics.”
The labor participation rate, meaning the number of Americans who are participating in the workforce was at its lowest number in more than two decades with 63.6 percent of Americans working. This decline helped push the unemployment rate lower.
Labor Secretary, Linda Solis, The BLS defended its numbers saying she was “insulted” that anyone would criticize their methodology.