We, at Wallet Blog, are as anxious for good news about the economy as is everyone else. We’d love to concentrate on giving money management advice for the vast fortunes the nation reaps in boom years, rather than discussing the pros and cons of economic rescue plans and the need to overhaul the financial industry. However, there’s a fine line between finding a ray of hope in this recession and simply misreading statistics.
A recent Associated Press headline read: Jobless benefit rolls drop sharply to nearly 6.7M. Good news right? Less people are receiving unemployment benefits. That can only mean one thing: all the people who’ve lost their jobs have found new employment. How could a drop in unemployment payouts be anything but evidence that the nation is finally on the upswing? After all, the AP article recounts the various highlights of this statistical evidence and calls them encouraging signs…
Reading between the lines, one detects a darker side to the statistics the article discusses. The unemployment rate for last month was 9.4% - that’s up from 8.9% the month before. If on May 31st, there was a 9.4% rate of unemployment and according to a report from the Labor Department (which the AP article cites) June 6th marked a record drop in the number of people collecting unemployment, it’s much more likely that the unemployment system is failing these people, than that all of these people managed to find jobs in one week’s time. The fact is that there are no less unemployed people than there were on May 31st. What the statistic actually suggests is that unemployment is on the rise, but benefits for many have run out (which is bad news, especially if you are one of these people).
What the AP article ends up doing is spinning this calamity as if it were good news. Many of the people who were collecting unemployment last month are now no longer receiving any income whatsoever. What we’re really seeing is millions of Americans who are now living without a financial safety net. We need to look at these statistics for what they are, even though we are all hoping for a quick recovery. Part of the reason we’re in this financial crisis in the first place is because the nation as a whole refused to heed warning signs. We were optimistic about the housing market. We were optimistic about sub-prime loans and the downturn on Wall Street. What we need now isn’t blind optimism, but realism. What we have here isn’t something to cheer about; instead its more bad news.