Last week, supporters of the current administration rejoiced over job numbers released by the Bureau of Labor and Statistics (BLS).  For the first time since the administration came to power, the official unemployment number fell below 8%.  Keynesian cheerleaders all claimed the numbers meant we are surely on the road to economic recovery, just in time for Christmas, and also, the election.  Others saw through this ruse.

The situation on the ground looks nothing like a recovery. 23 million people are still out of work or chronically underemployed.  This number is expected to rise dramatically next year. The situation in Washington should not give anyone cause for optimism.  Politicians refuse to look honestly and intelligently at the cause of our economic malaise, and so real solutions are not taken seriously or acted upon.  It is much easier and less painful to simply recalculate the numbers and redefine the terms until a rosier picture is presented.  There is only blind hope that at some point, for some reason, things might change.  But nothing will change for the better if we only stay the course.

The truth is the long term solutions to our economic quagmire involve some short term pain.  Re-evaluating the economic role of an institution as insidious and behemoth as the Federal Reserve will inconvenience some people, and those people happen to have a lot of power.  Similarly, the idea of ending government programs and closing down superfluous departments will always upset someone because it means someone will stop getting a government check.

No one wants to upset the apple cart, even if all the apples are rotten.

Not all of the unemployed are counted in the BLS unemployment numbers.  This is no secret.  In 1994 government statisticians came up with the term “discouraged worker” to remove entire swaths of people from the unemployment statistic.  Now all the government has to do to improve the unemployment numbers is discourage people from looking for a job.

Far more unintended consequences are created in Washington than jobs.

Ideally, the business sector should be able to depend on sound numbers from the BLS, but smart business leaders know that trust in these numbers leads to bad decisions and failure.  In regards to the recent jobs numbers, investor Jim Rogers recently stated “I have learned not to take advice from the government, especially the US government, which frequently misleads its citizens.”  He also noted the election just around the corner, suggesting timing as an extra incentive to keep fudging the statistics.

The real drivers of the productive economy can’t afford to take risks based on false numbers.  This is why economist John Williams created Shadow Government Statistics, utilizing more traditional methodologies and definitions to show business decision makers the real economic picture, warts and all.  He shows the real unemployment rate to be a staggering 22.8%.

This is a difficult figure to accept as the actual truth.  Perhaps if the politicians did, the people would finally demand real change and real solutions.  Perhaps they would consider that all of the so-called stimulus spending, quantitative easing and mountains of regulation from Washington has only crippled the economy.  Perhaps people would come to understand that fewer checks handed out from the public sector would mean more checks available in the private sector, and a return to real prosperity instead of just the appearance of it.

Keeping Up Statistical Appearances.