(ThyBlackMan.com) We are headed into an Economic Downturn, although many talking heads on the cable channels are actually saying, we are headed into a Recession. In language you can appreciate, continue reading and get an explanation; it ain’t that complicated. Who we VOTE for matters, especially when it comes to the CBC, whose “current members” aren’t working in our best interest, letting us down every day, due to their silence regarding our Job rates.
We need help, American workers, professional, blue collar, and working-class Americans, everywhere. We need President Biden, Democrats, and the Congressional Black Caucus (CBC), chaired by Representative Steven Horsford of Nevada to come clean, and drop the lie, when it comes to undercounting our unemployment rates. Economists have long established the real and true unemployment rate is the U-6 category rate, based on the Table of Alternative Measures of Labor Underutilization. The U-6 rate makes the May unemployment rate, 6.7%, not Biden’s 3.7% rate based on the U-3 category, which was never meant to be comprehensive of our Job situation.
The 6.7% unemployment rate will increase, as the Federal Reserve Bank (Fed) hikes interest rates to bring inflation down to its 2.0% target rate. The talking heads, maybe right. Here is how we can technically end up in a Recession, after this hiking cycle. The Fed has raised interest rates 10 times, as it engages in the most aggressive interest rate hiking cycle, in 40 years. As a result, the Fed anticipates this coming December Jobless rate will increase by one percent, rising from a low of 3.4% (U-3) to 4.4%.
U-6, the true, and Real unemployment rate, for December will conservatively reach 8.0% or higher in that same period. The true Black American unemployment rate, which is the highest of any worker group that the Fed tracks, is 2.7% higher over the Real Job rate and will reach 10.7%, or higher, by December. To put the 10.7% rate in perspective, the nation reached what was determined to be a Great Recession in 2008, when unemployment reached 10.1%.
What is truly, and more important, however, is when you can see these numbers, as actual Jobs, being lost. The increase of “one percentage point in our Job rate,” which will be reached, by December, as projected above, the Fed calculates the one percentage point amounts to 2 million American workers, professional, blue collar, and working-class Americans laid-off, due to the rate hikes. But that’s not the worse extent of it. Out of the 12 times the Fed has hiked interest rates, since 1945, to control inflation, like it is doing now, and brought the hiking to a stop – only one time out of the 12 times did the layoffs stop, also (only one time!). The unemployment rate in the other 11 times continued to rise one percent or more, creating more than a million additional layoffs. The probability is exceptionally high; there is over a 90% chance this will happen again, that layoffs will continue to rise, predictably hurting American families, including women who head households with children.
If Mr. Biden and Democrats, including Representative Horsford and members of the CBC own up, to the REAL Job rate, our economic circumstances will change dramatically, as the real 6.7% Job rate economy is revealed to us, and the world. A 3.7% Job rate economy is radically different from a 6.7% Job rate economy, especially as we observe in real-time our economy deteriorating, as the Fed actively pushes interest rates higher to quell inflation. There is no denying the Democratic Party is the culprit in the Job rate undercounting scheme. The vile scam of undercounting the Job rates of Jobless American workers, started under the Clinton administration. Former President Obama continued it, and President Biden wants to sustain it. (Why? Ask them; your guess is as good as mine).
If we “simply” put an end to the scam, we can adopt a consumer Tax Cut to grow our economy and Jobs, as Consumer Spending is a proven means or method to grow Jobs and our economy. We saw Consumer Spending work in real-time during the Covid 19 Downturn. Let me show you. Extending money to consumers, on which you pay little or no taxes, is a TAX CUT. “Do we get that?” That is what we experienced during the Covid 19 recovery.
Politicians simply disguised the name – it’s called misinformation. They called our tax cuts, stimulus payments, and tax credits. The end result is they took money from the U. S. Treasury and gave it to us, “consumers.” They gave money “directly,” to us, and we spent it, and created growth and Jobs. The numbers don’t lie. Under the Families with Children tax cut, which stood out; they gave this group of consumers money based on how many children they had. The IRS counted the children, and a check was cut, or money was deposited in their bank accounts based on the number of children, and how much each child gets. It amounted to $529 million a day. This may have been too much, and as far as Republicans were concerned, it was given to the wrong group of consumers, also.
Nevertheless, Jobs were created as this consumer group spent the money and expanded the economy. Here are the numbers. 1.091 million JOBS were created in July 2021, 483,000, in August, (in spite of the onset of the Delta variant), and 379,000 JOBS, in September during the peak of the variant, as many experts attested to the peaking. Common sense dictates this could work just as well, with another homogeneous group of consumers, assuaging the Republicans concerns about Families with Children, as tax cut recipients.
But we need Biden, Democrats, and the CBC to embrace the Real Job rate of 6.7% for May, as established by economists to justify such A TAX CUT. It’s incredible! We are asking them to simply do what is just and right for American workers. Tell the TRUTH! The most suitable group for the tax cut, you guessed it, is Baby Boomers. Let us look at the reasons why, this is a smart move once the Fed finishes hiking interest rates.
1) The 10%, $25,000 Baby Boomer Consumer Tax Cut will be deficit neutral. The Covid 19 recovery demonstrated, when you give a direct tax cut to consumers, who make up approximately 70% of your economic activity, you will create surplus revenues, making the tax cut deficit neutral. Even “a college graduate,” can understand this, if you give a direct tax cut to the 70% (the consumer), who is powering your economy, you are going to get a burst of growth, and job creation through “NEW” spending, by the 70% (the consumer), who is powering, and growing your economy.
Don’t take my word for it, let’s look at the numbers. The Treasury Department stated, the U.S. government posted a $119 billion budget surplus in January 2022. It was the first in more than two years, amid strong growth in tax receipts and a sharp drop in pandemic-related outlays.
2) The age group, beginning at 55 plus years, are currently responsible for approximately 40% of consumer spending in our economy. Baby Boomers are the largest homogeneous population, within that group of consumers. Consumption DATA shows, low-and middle-income Americans are more likely than wealthy earners to spend benefits, from the government immediately, and stimulate economic growth, creating millions of JOBS.
3) Retirees are a major voting bloc nationally, and many are under financial stress. Additionally, for many of them, spending the direct tax cut, which will lead to Job creation, without question, will be a patriotic duty.
There are more reasons. However, listing all of them would make this article too long. What is clear, it is time to choose a proven successful economic path for our nation, that works for ALL of US, and is based on the TRUTH, regarding “our REAL unemployment rates.” Capisce.
Staff Writer; James Davis
Mr. Davis is a Financial Analyst. His articles are about relating facts in a usable, truthful, and understandable way. That way, WE ALL WIN. James is, the author of three books, among them, “The Fix This Time,” Boost Your Retirement Income! Simultaneously Create Jobs and Spur Economic Growth (https://www.amazon.com/dp/B00MI3PD2M). Reach out to James @ his blog https://thefixthistime.com.
Question? Comment? One may use this email address; MrDavis@ThyBlackMan.com.