Wednesday, June 13, 2012

Obama's Economy

While looking through I found the below chart that he uses to show how all his stimulus and jobs programs have been successful. I added the unemployment rates for those years. The graph can only point out that the landslide of job loss slowed and began to maintain. We must always remember that while looking at unemployment rates it only reflects the number of people who are signed with the unemployment office or receiving unemployment benefits.

Some of those people who returned to the workforce did so by taking lower paying jobs, these are called the underemployed. Some people, like me, are attempting to earn a living for themselves through self employment. Some are living off IRAs.  For any number of reasons people have dropped out of the workforce.

The media doesn’t like to talk about the fact that even immigrants—both illegal and not—are fleeing our borders. Mexico has an unemployment rate just above 5%. Even though this is not a problem for Americans, it reflects the declining workforce.

 Someone adept with numbers can arrange them to make anything appear good. That is what was attempted in the chart below. Many Obama supporters will throw these numbers at us when debating.
The inflation rate is running between 2-3% which isn’t exceedingly high. It’s only because of cheap foreign imports that the rate remains low. These nine low-income countries, China, Brazil, Indonesia, India, Malaysia, Mexico, Philippines, Thailand, and Vietnam, in 2006, accounted for imports worth more than 600 billion dollars, equivalent to one third of all US imports or 5.5% of US GDP. Just from these nations alone the 2006 inflation rate was lowered by 2%. Half of this effect came from China.

I bring this up because those same imports also affect the unemployment rate. Some suggest tariffs to offset the trade imbalance. Tariffs or any type of import tax would be devastating to the US economy. We would automatically see the inflation rate double and this would be another tax on the American consumer. With more Quantitative Easing (effectively printing money) on the horizon, we can only renegotiate trade agreements to make them fairer to American workers.

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