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In Defense Of A Nation

Monday, January 27, 2014

By Michael Mccune: The Rant (US Government auditor for 16 years In Cheyenne, WY. -Is U.S. Economy In Recovery or Not?- (( to Have Michael send you the Rant to your Email contact Him Here ((

Is U.S. Economy In Recovery or Not?
More often than not the most outrageous claims are made from surface numbers and do not show the whole picture. The National Association of Counties' (NACO) latest released report about the economic health of the country is guilty of one of those claims.
NACO "represents the building blocks of the U.S. economy", the 3171 counties across the 50 states. NACO reported the U.S. economy grew in 2013--a fact which is not in question--but the degree of the recovery claimed is in question.
Emilia Istrate, director of research at NACO co-wrote the report in which NACO analyzed four economic performance indicators in 3069 counties. Why 3% of the counties were not included in this report was not explained. The four areas reported were economic output, employment, unemployment rates and home prices.
Their far-from-startling conclusions were "the recovery is still tenuous in some parts of the country despite overall growth in 2013, larger counties (500,000 plus) fared better than smaller counties in the recovery but had farther to go because they were also the center of the recession, employment in medium counties (50,000 to 500,000) was stable during the recession but is showing various results now with some improving and some not, and the small county economies had just about equal outcomes to what was experienced since 2008."
One of the key factors in the report was the reliance on "number of jobs." The analysis takes a bad hit in credibility here because, to the analyzers, a job in 2008 equals a job in 2013. They did not take into account the number of full-time jobs to part-time, temporary or contract jobs. This flaw is one all government analysis is guilty of to this point in the recovery.
A part-time job is not equal to a full-time job. A part-time employee can fill one, two or three positions and the bureaucracy still counts those as different employed individuals. Another flaw with the analysis is there is no indication if they took a look at units produced, year-over-year to adjust for inflation, or if they just took the dollar amounts and ran with that.
The large county economies made up almost three-fifths of the total GDP growth for the year and accounted for more than half the job growth. But, again taking into account inflation over the past five years, the reported gains in these larger counties leaves them virtually even with 2007's final reported figures meaning the last six years have been merely getting back to where we were before the recession's bite was felt.
The other problem is in the vast differences in population growth. Not surprisingly the large county group saw a larger gain in population by percentage than the smaller counties which would have increased GDP in those counties. A fair analysis would have determined GDP per person. In effect, smaller counties which comprised almost 70% of the total counties in the U.S. did not share at all in the recovery overall even though some small counties topped the charts in growth.
The report claims "28% of all small-county economies were on the path to recovery or remained in recession." That's a great number and a fine conclusion but if you are in recession or recovering from that recession you should account for every county, not only 28%. This is the most glaring mathematical error in the report.
The other problem, on a personal level, I had with the analysis was the basis of the report's self-inflating importance. "As fiscal tightening continues to limit the scope of state federal investment, it is becoming imperative for states and the federal government to work with counties to maintain the fundamentals of U.S. economy--the county economies."
One of the first fundamentals learned about the Army is the adage 'sergeants are the backbone of the Army'. In economy the basic adage was 'small business is the backbone of the economy.'
This report turns that upside down. Small counties dominate the landscape. But, it must be asked, if the large counties are doing so well and New York state has the higher percentage of 'big counties' in it, why is New York embarking on a new "tax-free zone" advertising blitz when it is doing so well?
The report is flawed in so many ways but it is a government-sponsored report and the bureaucracy seldom gets anything right. The scope was too narrow to give a true economic picture. Nationally, jobs reporting everywhere has been skewed by the ever-increasing number of part-time workers and those no longer in the work force.
And it is very curious that 3% of the nation's counties were not included. Were they random or were they all part of one specific group which would have effectively invalidated the report's conclusions?
The report concludes the overall U.S. economy is slowly recovering. That is not in dispute. But is the moving along fast enough to reach escape velocity from recession's clutches? That question is not answered.
But when only one county in the survey, Mountrail ND, "is the only county in the country that experienced no signs of the recession" and that county includes the Bakken shale formation and has but 9,000 residents, the report falls flat if it was intended to lift the pessimism the average consumer is feeling as reported earlier by the University of Michigan-Bloomberg "Consumer Confidence Report." 
Almost five years of recovery has still left us dangerously close to the edge of recession again. No amount of tiptoeing around facts to fit a political agenda can hide that.
"I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man."--Thomas Jefferson 

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