Wild-Eyed in Washington: They Say There Was No Recession
The U.S. Labor Department has revised its figure for 4th-quarter 2001 productivity gains to 5.2%, up from the 3.5% announced last month. This most recent revision of the stats is being used to assert that the recession never really happened and besides, happy days are here again--but even the Labor Department admits the increase is due entirely to the huge number of layoffs. Hours worked on non-farm businesses fell at a 3.8% rate in the 4th quarter, while production supposedly rose at 1.2%, "leaving workers who remain on payrolls with more tasks to complete" and therefore--presto!--higher productivity.
Meanwhile, before the Senate Banking Committee March 7, Federal Reserve chairman Alan Greenspan revised, not last year's stats, but his last week's speech to Congress. Greenspan said that last week it appeared we were "close to a turning point" in the economy, but now, "recent evidence increasingly suggests that an economic expansion is already well underway." He said "we will have experienced a significantly milder downturn than the long history of business cycles would have led us to expect."
Greenspan pointed to the gains in productivity (the ones the Labor Department has discovered) and low mortgage rates allowing mortgage refinancing, which has "given consumers more money to spend."
On March 5, Treasury Secretary Paul O'Neill declared that "It seems quite clear now that our economy never suffered a recession." O'Neill said the U.S. GDP may have contracted early in 2001, but it grew in the fourth quarter (again, courtesy of layoffs), and now the "economic fundamentals are moving back into place." And he prognosticated that, by the end of 2002, the U.S. will be enjoying an annualized rate of growth of 3.5%.
On March 8, however, President Bush showed a somewhat firmer grip on reality, when he played down euphoric media reports of a supposed jump in employment statistics (see below). "I don't care what the number-crunchers say," Bush said, insisting that the recession and the impact of the Sept. 11 attacks "affected our economy and affected a lot of people's lives."
The Labor Department/Greenspan/O'Neill revisions recall George Orwell's novel "1984": The principal character's job is to rewrite history on a daily basis beneath the watchful eye of Big Brother, to accommodate the ever-changing requirements of the state. The rewriting is so thorough that, when a "citizen" of Big Brother's state goes to the library, say, to look up a reference, or even to read old newspapers, he finds today's crop of last week's papers, say something different from what last week's crop of last week's papers said.
Cuts in Manufactured Goods Orders Sold to Suckers as a Recovery
After the U.S. Department of Commerce released its January 2002 figures on March 6, showing a 1.6% increase of new orders for manufactured goods compared to the previous month, stock markets immediately shot up on this "additional proof" that a recovery is right around the corner. But even the Department of Commerce report, however massaged it may be, reveals that this is complete nonsense.
In comparison to a year ago, there is only one category of manufactured goods in which new orders are rising strongly: "defense aircrafts and parts," which are up 53.9% year-on-year. Automobile orders are up 6.6%. In almost all other categories, new orders are still sharply down compared to the year before. Some examples:
- Iron and steel mills, down 5.9%
- Aluminum and nonferrous metals, down 14.5%
- Industrial machinery, down 15.4%
- Metalworking machinery, down 10.2%
- Turbines, generators, power transmission equipment, down 33.9%
- Material handling equipment, down 29.8%
- Electronic computers, down 25.5%
- Non-defense communications equipment, down 39.1%
- Electronic components, down 33.8%
No wonder 1.2 million manufacturing jobs have been lost in the last 12 months in the United States.
More Recovery Nonsense: 1.2 Million Jobs Gone for Good
Rather than face reality, the bubbleheads have chosen to declare a "recovery," and to make up the facts to support that claim.
Exemplary is the way the Lazard Freres-controlled Washington Post treated the U.S. Labor Department's January jobs report. According to that report, 587,000 people left the workforce in January--in total, there has been a reduction of 2.4 million workers in the labor force in 12 months--and there were 4 million part-time workers who wanted full-time jobs. The number of manufacturing workers fell by 89,000, bringing the total manufacturing jobs lost over the past 12 months to 1.2 million.
By any sane standard, this is horrible news, representing shattered lives, wasted talents, and lost capabilities. But in the Washington Post, it is a sign of recovery. "The U.S. unemployment rate unexpectedly dropped to 5.6% in January, even as the nation shed more jobs," the Post proclaimed, presenting this as a positive development. However, for those who read beyond the headlines, a different picture emerged, with the paper admitting that the drop in the unemployment rate from 5.8% in December "was primarily due to the large number of people who dropped out of the workforce in January."
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