US Economy Retracts 0.1% in the 4th Quarter

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What about all that stimulus spending and extra taxing we’ve done? It hasn’t done any good….zip!

National Review: According to the Bureau of Economic Analysis’s latest report, the U.S.’s gross domestic product contracted at an annualized rate of 0.1 percent in the fourth quarter of 2012. This is quite a large deceleration from the third quarter, in which it rose at a rate of 3.1 percent. This is the first time the U.S. economy has shrunk since the second quarter of 2009; we join the U.K. in having a downward tick in the fourth quarter.

This is a pretty significant miss from expectations: Various surveys of economists had predicted about 1 percent growth.

The US Economy Is A Lot Worse Than You Think – OpEd

By:

January 30, 2013

 Most Americans know the economy is in bad shape even if a majority voted to reelect the man most responsible for making a bad economy worse. And, no, it was not George W. Bush who is responsible for the 2008 financial crash. It was the government with its housing programs that encouraged giving mortgage loans to those who could not afford them and then bundling those “toxic assets”, and selling them to banks who then found themselves in trouble for investing in them.

Another partner in the nation’s financial woes has been the Federal Reserve, a banking cartel given the right to literally print money. The Fed recently released the fact that its holdings in U.S. government debt has increased by 257 percent since President Obama took office! Those holdings are at an all-time record of $1,696,691,000,000 at the close of business on Wednesday, January 23. The other major holder of our debt is China at $1,170,100,000.000.

It’s worth taking a few minutes to see how the policies of President Obama, whether a deliberate effort to ruin the economy or just the result a lack of understanding of how the U.S. economy works, has put the U.S. on the precipice of failure comparable to what is occurring in Europe. It is a global, as well as national problem as the central banks of the EU desperately transfer billions among themselves to stave off a catastrophe that will destroy the wealth of their citizens.

The federal government ran a deficit (the difference between what it owes and what revenues it takes in) of $292 billion for the first two months of fiscal year 2013—October and November 2012—amounting to $4.8 billion of borrowed money every day. The Congressional Budget Office reported that federal revenues rose by $30 billion—a ten percent increase over last year—but spending increased even more, going up by $87 billion (16%).

Spending on Medicare, Medicaid, and Social Security was about 7% higher–$8 billion than last year. For years, Congress has resisted reforming these “entitlement” programs and Obamacare has only exacerbated the problem. In order to fund its establishment, the Obama administration took $716 billion from the Medicare funds. The Social Security funds have been “borrowed” by Congress for years while the numbers of eligible senior citizens has steadily increased as “baby boomers” come of age.

The call for higher taxes on “millionaires and billionaires” has fallen hardest on the middle class, in reality increasing taxes on them. The reality is that the middle class taxpayer pays 25% of their income in federal income tax these days, but when you add in 13.3% in the federal Social Security and Medicare payroll taxes, it adds up to 38.3%. According to the Tax Foundation, the average state’s income tax rate on the middle class is 4.82% (not all states have an income tax in addition to the federal government.) That brings the total to $43.12% of middle class income drained off to pay taxes.

Add in all the other taxes we pay on gasoline, telephones, and other necessities, and the middle class is being tapped for half their earnings.

The Republican Party, in power in the House of Representatives, has offered legislation to bring some relief to middle class and other taxpayers. It has sent annual budgets to the Senate where they have died for the past three years.

All this has been happening during the first term of the Obama administration. In a January 25th commentary posted on AmericanThinker.com, Steve McCann noted that “As of the end of 2012, the United States has experienced the worst five-year period—which includes, as the end of the final four years, Obama’s first full term—since 1928-1932 and the start of the Great Depression.”

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18 Democratic senators revolt against Harry Reid on Obamacare tax

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Eighteen Democratic U.S. Senators and senators-elect sent a letter to Senate Majority Leader Harry Reid last week calling for a “delay in the implementation” of the medical device tax in Obamacare, the Wall Street Journal reports.

The provision was an integral part of the version of the Obamacare law, which was passed in the Senate under Reid’s stewardship in 2009. It is set to take effect on January 1, 2013.

An effort to repeal the provision failed in Congress in June. At the time, Reid characterized the proposed repeal as a Republican attack on Obamacare.

“The medical technology industry directly employs over 400,000 people in the United States and is responsible for a total of two million high-skilled manufacturing jobs. … With this year quickly drawing to a close, the medical device industry has received little guidance about how to comply with the tax — causing significant uncertainty and confusion for businesses,” according to the letter. “We urge you to support delaying enactment of this provision in a fiscally responsible manner.”

The provision’s 2.3 percent excise tax on medical device manufacturers has sparked panic within the medical devices industry. Indiana-based Zimmer Holdings, which manufactures hip replacement implants, laid off 450 workers in anticipation of $60 million in taxes in 2013. Michigan-based Stryker Corp., which also produces hip implants, laid off 5 percent of its workers in a bid to compensate for the $100 million it will pay in taxes next year.

The provision has proved to be problematic for Democratic senators from states with large numbers of medical device companies. Indiana Senator-elect Joe Donnelly and Michigan Senator Debbie Stabenow signed the letter alongside the next Massachusetts Senate delegation, Elizabeth Warren and John Kerry, whose state is home to more than 400 medical device companies.

Democrats sent their letter to Reid less than three weeks after dozens of medical device industry executives “swarmed” Capitol Hill in a lobbying push that resulted in more than 60 different meetings with legislators. The trade groups Advanced Medical Technology Association, Medical Imaging and Technology Alliance, and Medical Device Manufacturers Association led the lobbying effort to delay the provision.

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Mass layoffs Planned as Obamacare becomes reality

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Here’s a list of companies planning layoff’s because of Obamacare, compliled by Freedom Works.

Welch Allyn

Welch Allyn, a company that manufactures medical diagnostic equipment in central New York, announced in September that they would be laying off 275 employees, or roughly 10% of their workforce over the next three years.  One of the major reasons discussed for the layoffs was a proactive response to the Medical Device Tax mandated by the new healthcare law.

Dana Holding Corp.

As recently as a week ago, a global auto parts manufacturing company in Ohio known as Dana Holding Corp., warned their employees of potential layoffs, citing “$24 million over the next six years in additional U.S. health care expenses”.  After laying off several white collar staffers, company insiders have hinted at more to come.  The company will have to cover the additional $24 million cost somehow, which will likely equate to numerous cuts in their current workforce of 25,500 worldwide.

Stryker

One of the biggest medical device manufacturers in the world, Stryker will close their facility in Orchard Park, New York, eliminating 96 jobs in December.  Worse, they plan on countering the medical device tax in Obamacare by slashing 5% of their global workforce – an estimated 1,170 positions.

Boston Scientific

In October of 2009, Boston Scientific CEO Ray Elliott, warned that proposed taxes in the health care reform bill could “lead to significant job losses” for his company.  Nearly two years later, Elliott announced that the company would be cutting anywhere between 1,200 and 1,400 jobs, while simultaneously shifting investments and workers overseas – to China.

Medtronic

In March of 2010, medical device maker Medtronic warned that Obamacare taxes could result in a reduction of precisely 1,000 jobs.  That plan became reality when the company cut 500 positions over the summer, with another 500 set for the end of 2013.

Others

A short list of other companies facing future layoffs at the hands of Obamacare:

  • Smith & Nephew – 770 layoffs
  • Abbott Labs – 700 layoffs
  • Covidien – 595 layoffs
  • Kinetic Concepts – 427 layoffs
  • St. Jude Medical – 300 layoffs
  • Hill Rom – 200 layoffs

Beyond the complete elimination of a significant number of American jobs is another looming problem created by the health care law – a shift from full-time to part-time workers.

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Steve Wynn, CEO of Wynn Resorts, “I’ll Be Damned If I Want To Have Obama Lecture Me”

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On the Tuesday broadcast of the nightly Nevada political program “Ralston Reports,” Steve Wynn, CEO of Wynn Resorts sat down with host Jon Ralston to discuss the presidential election.

Wynn, an outspoken critic of President Obama, didn’t hold back in his latest criticism of the incumbent president seeking a second term.

“I’ll be damned if I want to have him lecture me about small business and jobs. I’m a job creator. Guys like me are job creators and we don’t like having a bulls-eye painted on our back,” Wynn said about Obama to Ralston. An excerpt of the interview is below.

WYNN: I’ve created about 250,000 direct and indirect jobs according to the state of Nevada’s measurement. If the number is 250,000, that’s exactly 250,000 more than this president, who I’ll be damned if I want to have him lecture me about small business and jobs. I’m a job creator. Guys like me are job creators and we don’t like having a bulls-eye painted on our back.

The president is trying to put himself between me and my employees. By class warfare, by deprecating and calling a group that makes money ‘billionaires and millionaires who don’t pay their share.’ I gave 120% of my salary and bonus away last year to charities, as I do most years. I can’t stand the idea of being demagogued, that is put down by a president who has never created any jobs and who doesn’t even understand how the economy works.

Wynn on a scrapped business plan: “I’m afraid of the president. I have no idea what goofy idea, what crazy, anti-business program this administration will come up. I have no idea. And I have to tell you Jon that every business guy I know in the country is frightened of Barack Obama and the way he thinks.”

Jack Welch: I Was Right About That Strange Jobs Report

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The economy would need to be growing at breakneck speed for unemployment to drop to 7.8% from 8.3% in the course of two months.

Imagine a country where challenging the ruling authorities—questioning, say, a piece of data released by central headquarters—would result in mobs of administration sympathizers claiming you should feel “embarrassed” and labeling you a fool, or worse.

Soviet Russia perhaps? Communist China? Nope, that would be the United States right now, when a person (like me, for instance) suggests that a certain government datum (like the September unemployment rate of 7.8%) doesn’t make sense.

Unfortunately for those who would like me to pipe down, the 7.8% unemployment figure released by the Bureau of Labor Statistics (BLS) last week is downright implausible. And that’s why I made a stink about it.

Let’s get real. The unemployment data reported each month are gathered over a one-week period by census workers, by phone in 70% of the cases, and the rest through home visits. In sum, they try to contact 60,000 households, asking a list of questions and recording the responses.

Some questions allow for unambiguous answers, but others less so. For instance, the range for part-time work falls between one hour and 34 hours a week. So, if an out-of-work accountant tells a census worker, “I got one baby-sitting job this week just to cover my kid’s bus fare, but I haven’t been able to find anything else,” that could be recorded as being employed part-time.

The possibility of subjectivity creeping into the process is so pervasive that the BLS’s own “Handbook of Methods” has a full page explaining the limitations of its data, including how non-sampling errors get made, from “misinterpretation of the questions” to “errors made in the estimations of missing data.”

Bottom line: To suggest that the input to the BLS data-collection system is precise and bias-free is—well, let’s just say, overstated.

Even if the BLS had a perfect process, the context surrounding the 7.8% figure still bears serious skepticism. Consider the following:

In August, the labor-force participation rate in the U.S. dropped to 63.5%, the lowest since September 1981. By definition, fewer people in the workforce leads to better unemployment numbers. That’s why the unemployment rate dropped to 8.1% in August from 8.3% in July.

Meanwhile, we’re told in the BLS report that in the months of August and September, federal, state and local governments added 602,000 workers to their payrolls, the largest two-month increase in more than 20 years. And the BLS tells us that, overall, 873,000 workers were added in September, the largest one-month increase since 1983, during the booming Reagan recovery.

These three statistics—the labor-force participation rate, the growth in government workers, and overall job growth, all multidecade records achieved over the past two months—have to raise some eyebrows. There were no economists, liberal or conservative, predicting that unemployment in September would drop below 8%.

I know I’m not the only person hearing these numbers and saying, “Really? If all that’s true, why are so many people I know still having such a hard time finding work? Why do I keep hearing about local, state and federal cutbacks?”

I sat through business reviews of a dozen companies last week as part of my work in the private sector, and not one reported better results in the third quarter compared with the second quarter. Several stayed about the same, the rest were down slightly.

The economy is not in a free-fall. Oil and gas are strong, automotive is doing well and we seem to be seeing the beginning of a housing comeback. But I doubt many of us know any businessperson who believes the economy is growing at breakneck speed, as it would have to be for unemployment to drop to 7.8% from 8.3% over the course of two months.

The reality is the economy is experiencing a weak recovery. Everything points to that, particularly the overall employment level, which is 143 million people today, compared with 146 million people in 2007.

I’m not the first person to question government numbers, and hopefully I won’t be the last. Take, for example, one of my chief critics in this go-round, Austan Goolsbee, former chairman of the Obama administration’s Council of Economic Advisers. Back in 2003, Mr. Goolsbee himself, commenting on a Bush-era unemployment figure, wrote in a New York Times op-ed: “the government has cooked the books.”

The good news is that the current debate has resulted in people giving the whole issue of unemployment data more thought. Moreover, it led to some of the campaign’s biggest supporters admitting that the number merited a closer look—and even expressing skepticism. The New York Times in a Sunday editorial, for instance, acknowledged the 7.8% figure is “partly due to a statistical fluke.”

The coming election is too important to be decided on a number. Especially when that number seems so wrong.

Mr. Welch was the CEO of General Electric for 21 years and is the founder of the Jack Welch Management Institute at Strayer University.

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Meet the Obama Donors at the Bureau of Labor Statistics (BLS)

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BLS logo

BY:
October 5, 2012 1:28 pm

At least two economists at the Bureau of Labor Statistics (BLS) have contributed to President Barack Obama’s campaign. Harley Frazis of Bethesda, MD, has contributed at least $2,000 to Obama and $9,000 to the Democratic National Committee over the last three election cycles. During his time at BLS, Harley has published a number of papers including his most recent, “How to Think About Time-Use Data: What Inferences Can We Make About Long- and Short-Run Time Use from Time Diaries?”

Stephen Phillips of Washington, D.C., has contributed at least $270 to Obama during the 2012 cycle. According to his LinkedIn profile, Phillips served as an economist at BLS between June 2009 and July 2012. Phillips was responsible for examining the impact of Obamacare on Healthcare North American Industry Classification System indices. Phillips was also assistant coach for a girls’ high school tennis team in 2010.

Clarification, 3:31 P.M.: The post has been updated to note Phillips’ dates of employment at the BLS.

Sept. jobless report labeled ‘a setup’

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As you read this be aware that the Household surveys are more like a poll of 60,000 people (been done for years) , but the business survey is more reliable. Also what isn’t being reported is 582,000 of these 873,000 household jobs are part time/temporary jobs. The U6, which is a better indicator of unemployment is still over 14%.

CNBC calls the numbers “tame,” but also notes the “contradictory” numbers.

Hotair.com says:

Something’s odd with this report.  Either the household survey (one of the two surveys the BLS uses to compile this report) is way off, or the BLS is underreporting job growth in the overall numbers.

A Christian financial expert is reacting to Friday’s unemployment rate report out of Washington, calling the alleged drop “deceptive” and indicative of why Americans are losing faith in their government.

The federal government says the unemployment rate fell sharply from 8.1 percent to 7.8 percent last month — the same unemployment rate as when Barack Obama took office. According to the report, 114,000 jobs were added in September – many of them part-time.

Last month, Dan Celia of Financial Issues Stewardship Ministries predicted the jobless rate would fall to 7.9 percent in the October jobs report — which is due out just days before the November election. But the drop reported today, according to Celia, is not the result of a massive number of jobs being created.

“I said it was a setup. This was more smoke and mirrors and deception,” he said Friday on American Family Radio. “And I also said that I’ve lost all confidence and faith — what little I had, and I didn’t have a lot — in the Department of Labor Statistics.

“Well, this number that we got today, going down below eight percent leading up to the election, is confirmation of everything that I’ve been saying. And I’m sad to say that because this is our government that we’re losing faith in.”

Celia calls it “very interesting” that in this latest report, the labor participation rate did not change.  “[But] what did change dramatically were the household surveys,” he stated. “Now let me tell you a little bit about the household surveys.

“[That's] something that has been going on for many, many years — since the 70s — where the Bureau of Labor Statistics picks up their dial-up phone, which I think they still have, because they don’t do real-time data and they haven’t come in to the technology of the 21st century yet, and they pick up and they make surveys. They call numerous people, people that are on their ‘list,’ and they ask them: Has anybody in your household found a job?

According to those surveys, 873,000 people reported finding a job — the largest number since 1983.

“Let me just tell you about 1983,” Celia offered. “In 1983, we were creating well over a million private sector jobs on average — a million. We created 114,000 this month, with an average this year of somewhere around 140,000.”

That number – even if it were half-a-million jobs a month – is not enough, says Celia, to maintain what he terms a “stagnant inflation.”

“But somehow, in the midst of creating 114,000 jobs this month, we see an unemployment rate go down because of the households surveys, which is an archaic way of doing anything when we have real-time data available – do you understand that?….”

“… What I’m saying is, you call household surveys and you have more positive household surveys than you have had since 1983 when we were creating over a million jobs per month? You figure it out.”

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