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Depression and denial

The official numbers don’t lie — no matter how hard the Bureau of Labor Statistics tries:

An alarming half-million American jobs vanished virtually in a flash last month, the worst mass layoffs in over a third of a century, as economic carnage spread ever faster and the nation hurtled toward what could be the hardest hard times since the Great Depression.

Underscoring Friday’s dismaying signs of a rapidly deteriorating economy, General Motors announced yet more job cuts, and a record number of homeowners were reported behind on mortgage payments or in foreclosure.

Somehow Wall Street found a silver lining, betting that so much bad news would force fresh government action to revive the foundering economy. The Dow Jones industrial rose 259 points.

Staring at 533,000 lost jobs, economists were anything but hopeful. Since the start of the recession last December, the economy has shed 1.9 million jobs, and the number of unemployed people has increased by 2.7 million — to 10.3 million now out of work.

Some analysts predict 3 million more jobs will be lost between now and the spring of 2010 — and that the once-humming U.S. economy could stagger backward at a shocking 6 percent rate for the current three-month quarter.

This news illustrates several truths: Figures can’t lie but (government) liars can figure; the Dow Jones Industrial Average has little basis in reality; and the worst is still ahead.

First, the unemployment rate released by the BLS is actually 12.5% when you include people who want a job but have given up, people with part-time jobs that want full-time, and all the people who dropped off the unemployment rolls because their unemployment benefits ran out. This is the government’s official “U6” rate.

But even that number is deceptive. According to John Williams of

Up until the Clinton administration, a discouraged worker was one who was willing, able and ready to work but had given up looking because there were no jobs to be had. The Clinton administration dismissed to the non-reporting netherworld about five million discouraged workers who had been so categorized for more than a year.

Adding the discouraged workers written off during the Clinton years back into the government’s U6 rate yields a real unemployment rate that approaches 17%.

Second, the ability of investors to somehow see this as a good thing boggles the mind. It does, however, demonstrate that Wall Street is looking to the American taxpayer, rather than the American worker, as the answer to its problems.

Finally, this news, even as sanitized as it is, is more evidence that the pundits and professional financiers who see a recovery in 2009 are either clueless or spinning. I’m no statistics analyst, but there are simply too many things happening “for the first time since the Great Depression” to expect things to turn around by next fall.

This nation has survived worse in the past, but let’s get real. This won’t be over soon.

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