More Trouble Besides the Unemployment Rate

9167cookie_jarAnother Friday, another dismal unemployment rate: 7.9 percent, which is slightly higher than last month. So while everybody is wondering how this will affect the upcoming election results, I have been looking at a couple of other indicators that may keep the unemployment rate unmoved for months to come.

 

Labor productivity is up. Output per hour increased 1.9 percent in the non-farm business sector. This is actually good in the long run. as it means that those currently employed are producing more, which typically translates into higher wages. But it also means that unless demand in goods and services surges, employers will be perfectly happy with the

productive employees they have. Thus, no need to hire more.

Business owners are selling but buyers aren’t buying. is causing business owners to dump their assets before the end of the year. The reason? Nobody knows what is happening with tax rates in 2013. While Congress may wait until the New Year’s Eve ball drops to decide on extending the Bush-era tax cuts and continue leaving the capital gains tax rates at 15 percent, rational people who plan ahead can”t wait that long. With the possibility of capital gains rates going go 23.8 percent (when including the new capital gains Medicare tax), entrepreneurs will

cut their losses now. This is the same thing that happened before the 1987 capital gains tax hike took effect.

 

On the flip side, due to uncertainty, potential businesses buyers are not ready to buy lest they be stuck with a burdensome and wishy-washy tax code and regulatory environment.

The only answer so far from the administration has been to appoint a Secretary of Business. The bottom line is the bureaucracy that has contributed greatly to unemployment now wants to fix it. Maybe I am a little naive, but how about the federal government just keep its mitts out of the private sector”s cookie jar and see what happens?

 

Comments (2)

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  1. Kyle says:

    The man who hasn’t held a Jobs Council meeting in 8 months will appoint a Secretary of Business, if he wins another term?

    Lovely.

  2. Robert says:

    How about we appoint a Secretary Job Fairy? I believe that may help.

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