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Beware Sunny Government Statistics

In Business, Economy, Jobs, Local News, National News, Opinion on December 20, 2011 at 10:10 am


By Gery L. Deer

According to government reports, unemployment and foreclosure figures are showing all the signs of an improving economy. In November, USA Today reported the national unemployment average fell to 8.6 percent, down from 9 percent in October. Similarly, according to government accounts, foreclosure filings appear to have decreased over the last year as well. Those numbers seem to vary, depending on the source.

The problem with these statistics is that they often ignore important information showing that, what looks like economic recovery is actually a lie of omission. Take the unemployment reports, for example.

As the economy worsened and more people lost jobs those already unemployed became less hopeful of finding work. Many simply stopped reporting their unemployment status for whatever reason and at that point were no longer included in the statistics.

Over time, more and more people who have been out of work for a long period of time stop going back to the unemployment office. As benefits come to an end and with no job potential on the horizon, people either just stop filing or take part time work to put food on the table.

The underemployed are also omitted from the statistics. Underemployed people are those who have taken whatever work they can find but who may have once earned a higher salary in a more suitable position. An underemployed person could be an architect, for example, who takes a seasonal, general labor job on a construction crew.

Housing statistics can be manipulated in a similar fashion, to show improvement where none yet exists. Listen carefully to how this data is reported. Generally the wording is something like, “The White House reported today that foreclosure filings were down last month …” and so on. The number of filings may have decreased but there are many reasons for that.

According to the real estate website, RealtyTrac.Com, an average of one in every 500Ohiohousing units is in foreclosure. In most states, foreclosure filings are expected to increase, not drop, as the government stats seem to report. Some homes, purchased as foreclosed properties over the last couple of years are in foreclosure again, adding to the problem.

Additionally, within a given region, usually there is a finite number of pre-existing homes, and a particular segment of those whose mortgages have fallen into default. At some point, the market hits a peak where there are no more homes to foreclose on and the number of filings actually drops, but the problem still exists.

Then, while the White House reports “fudged” housing figures, one of the government’s pinnacle villains in the housing crisis is talking out of the other side of its mouth. Freddie Mac reported a noted increase in foreclosure filings in November. The agency estimates that it will take more than 15 years to relieve the burden of foreclosed property inventory.

The point here is that, especially in an election year, government officials will “spin” facts and figures to paint as positive a picture as possible to help keep everyone in their offices. “Spin,” is when the communications officers and public relations directors word the facts in a way that benefits the originator in some way.

Everyone wants credit for making things better and getting people back to work. Unfortunately, short of drafting people and creating more beaurocratic offices, the government doesn’t create jobs – only private industry can do that.

For the public, the only way to be certain of the facts is to go look them up at the source. Looking at the data in its raw form can help shed light on the facts, without the media hype and government spin.

Gery L. Deer is an independent business writer and columnist based in Jamestown, Ohio. Read more at http://www.deerinheadlines.com.



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