I have a confession: the boys at Powerline utterly fascinate me. On paper, they are smart guys: all of them are ivy league educated and all are lawyers with a large national firm. And I'm sure that, if you needed a top-notch commercial litigator out of Minnesota, one of these guys would be on the list to call.
But these guys just can't get anything right when it comes to economics. I mean nothing. You'd think that after making nothing but erroneous calls for an entire year, they'd call it quits. But, you'd be wrong.
The latest missive is from Scott Johnson, titled, "Talkin' Unemployment Blues." Here's the opening paragraph:
President Obama made an appearance in the White House press room on Friday to take a victory lap over the fall of the official unemployment rate (U-3) to 4.9 percent (video below, about 15 minutes). Is that number for real? Referring to the hell he saw tending to wounded men during the Civil War, Walt Whitman held that “the real war will never get in the books.” By the same token,I wonder if the real unemployment will ever get in the books.
That's right. At the beginning of his term, when the financial world was literally collapsing around him, Obama secretly fired the entire staff of the BLS so they could cook the statistical books. That's why the unemployment rate climbed for the first few years of Obama's term, finally hitting 10% in 2010. Then, the rate moved lower for the remainder of his term. If he's going to hire people to manipulate the data, you'd think they'd do a better job than a gradual rate of decline.
But that's not the best part. Next, Johnson quotes Shadowstats. Yes, he actually relies on data from Shadowstats. Johnson even uses a graph from the website that shows a "real" unemployment rate of about 22.5%. Note to Mr. Johnson: SS was debunked about 8 years ago by James Hamilton (a leading economist, BTW) and the BLS. In quoting SS, you've basically demonstrated that you have no idea what you're talking about.
But using SS isn't the best part. The best part is Johnson links to a report from the St. Louis Federal reserve on the labor force participation rate (LFPR). Here's that report's conclusion:
The BLS projections show the LFP rate continuing its decline, reaching 62.5 percent in 2020 (using the 2010-2020 medium-term projection). Since 2000, the BLS has projected the long-term decline in the LFP rate, indicating that the high LFP rate that we saw in 2000 might be a figure of the past. In particular, the decline in women's LFP since 1999 is not expected to reverse. The BLS does not expect the large decline in the LFP rates for the youngest group, 16-24-year-olds, to reverse either. To the extent that the decline for the youngest group is due to the time spent at school, it is possible that these workers will show a higher labor force attachment once they are out of school.
In other words, the reports shows that: demographers and statisticians have known about this decline for some time. They have also studied it and can explain it. While Johnson thinks the report bolsters his credibility, it only shows that he's clueless. As in totally clueless.
Memo to Powerline: econ is not your thing. It's really not.
