Janet Yellen has finally come to her senses — somewhat
Janet Yellen has finally come to her senses — somewhat By John Crudele – NYPost
I’ve been telling you for years that the employment data produced by the US government were misleading people into thinking the economy was performing better than it really was.
Now Federal Reserve Chair Janet Yellen — finally! — agrees.
Yellen, speaking before the National Association of Business Economics on Sept. 26, said, “My colleagues and I may have misjudged the strength of the labor market, the degree to which longer-run inflation expectations are consistent with our inflation objective or even the fundamental forces driving inflation.”
That’s what she said.
Internet news sites picked up that statement, but none of the major newspapers did. And the story behind Yellen’s admission and its importance would be way over the heads of TV news anchors — so they ignored it as well.
Yet Yellen’s statement is important as heck. It means that the Fed has been screwing up in thinking that the US economy was, as Yellen has often said, near full employment.
But here’s the kicker — Yellen has been overestimating the strength of the job market and underestimating the amount of inflation in the economy.
The big question is whether Yellen was just misreading the data or whether the data she was reading were wrong. There will need to be years of investigation to determine that, but I’ll give you a clue now.
Anyone who lives in the real world knows that the unemployment rate is far higher than the 4.2 percent that the Labor Department reports. And that the job growth each year — as I’ve been harping on — is mostly driven by guesstimates and adjustments made by government statisticians who apparently don’t live in the real world.
And, of course, the economy has been creating crappy-paying, benefit-lacking jobs that don’t come close to replacing the higher-quality employment that went bye-bye after the last recession.
Last Friday, Labor said the jobless rate dipped in September to 4.2 percent from 4.4 percent in August — and its number crunchers also reported that 33,000 jobs were lost last month.