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THE RECESSION IS NOT OVER
Despite Obama Administration claims, recent job stats show the economy is still very unstable.  
--10/30/09

Many mainstream economists are declaring that the economic recession is either over or will soon be over. In addition the Obama administration is touting that the stimulus plan signed into law in February will eventually create or save some three million jobs. However a closer look at the unemployment figures shows that there is little reason for optimism.

The latest unemployment rate was reported as 9.4 percent. Many pundits celebrated this number because they had projected the rate would be over 10 percent. However the rate does not indicate that a) more people are finding jobs or b) more jobs are being created (despite Obama administration claims). In addition the rate does not count those no longer receiving unemployment benefits, nor does it count those no longer looking for work. If these groups were counted, the rate would be much higher.

Meanwhile Obama administration officials are declaring that they either saved or created hundreds of thousands of jobs. There is no way to quantify this claim, and even if the officials are correct, the important question is: what types of jobs are being saved or created?

Assuming that the officials are correct, most jobs created or saved would have to be in the public sector. This means they are mostly government jobs funded by taxpayers. These jobs can offer short-term benefits to the economy by putting some people back to work, but they will ultimately become a drain on the economy because they pull labor (and, in turn, capital) from the private sector, which contracts the free market. Contracting the free market harms consumers by giving them fewer choices, which will cause them to spend less. Less spending means less business revenue, and less business revenue means less jobs.

Public-sector job creation has been outnumbering private-sector job creation since the September 11, 2001 attacks. The Bush administration spent billions creating myriad bureaucracies to fight the war on terror. Now the Obama administration is spending trillions to create even more bureaucracy, ostensibly to fix the economy. Either way, government intervention through spending only makes things worse.

Until unemployment is corrected by creating private-sector jobs that can provide meaningful goods and services to consumers, and until this damaging government intervention is stopped, this recession will be far from over.

Primary article source:  www.mises.org