by Clifford F. Thies

Somebody has to tell this guy that the unemployment rate not going up when the number of people having jobs goes down is not a good thing.

In the December labor market report, the unemployment rate held steady at 10 percent while the number of Americans having jobs went down by 85,000. There is only one way, mathematically, for this to happen. It is for the labor force participation rate (the number of people working and looking for work, as compared to the number of population over 16) to fall. This rate fell in December, to a 25-year low of 64.6 percent. It fell because more and more people have given up the hope of finding work.

Christina Roma, Chief Shill for the Administration on the Economy, put it this way, “To put this number in perspective, employment declined 139,000 in September and 127,000 in October. So, in a broad sense the trend toward moderating job loss is continuing.”

How does it feel, Christina, to be the spin doctor for an economic disaster?

The end of hope?

As I have been tracking it, consumer and business confidence are at pathetically low levels. According to my monthly meta-survey of something like 100,000 households, consumer confidence fell during 2007 to a very low level, from which – even two years later! - it has hardly recovered. A corresponding meta-survey of business, including small business, supply chain managers, bank loan officers, human resource managers, CFOs and CEOs, gives a very similar picture.

Consumer and business confidence refer to short-run prospects, e.g., one-year or less. In terms of longer-run prospects, a particular question from the monthly survey conducted by the Survey Research Center of the University of Michigan is informative. It asks what kind of business conditions are expected in five years. At the start of the decade, about 60 percent expected good times. Nowadays, about 60 percent expect bad times. In April, 57 percent of respondents to a Rasmussen Poll said they expect the children of today to not be as well off as their parents. My God!

Why should Americans be so despondent?

The problems facing this country are not merely subjective, although fatalistic pessimism is itself a problem. Four major concerns loom like the four horsemen of the apocalypse over the economy.

In terms of higher taxes, we have:

— Expiration of Bush tax cuts

— Higher taxes on “the rich”

— Expiration of various business tax breaks and of the amelioration of the AMT

In terms of the risk of inflation, we have:

— Unsustainable budget deficits, huge debt guarantees and other “off balance sheet” liabilities

— Doubling of the Money Supply

— Early warning signs: Gold, Exchange Rates

In terms of a socialized economy, we have:

— Health care reform and the cutting of Medicare and Medicaid, the “savings” of which will mean some combination of higher private insurance premiums and reduced quality of health care

— Socialization of industry in the name of Climate Change

— TARP and the socialization of credit

In terms of geopolitical uncertainties, we have:

— Afghanistan

— Al Qaida

— Home-grown terrorism

— Radical Islam in Africa and Asia

— Nuclear Iran

These are real problems that require a strong and prosperous economy, as well as inspirational leadership in Washington.

Another stimulus package?

While Ronald Reagan and Margaret Thatcher got the economies of the U.S. and U.K. rejuvenated using tax cuts, deregulation and privatization, this Administration reverts to the old-fashioned Keynesian stimulus of big spending.

But, the patient needs hope, not another shot of adrenalin. Hope that you can profit through hard work and risk-taking. Not a zombified economy of moochers counting on foreigners increasing the credit lines on our charge cards.

The idea that we can spend our way out of the current mess makes as much sense as King Ahab making sacrifices to Ba’al at a time of decline in the history of Israel. We can sacrifice our freedom on the altars of socialism but we will get nothing but ruin in return.

Dr. Thies is a professor of economics at Shenandoah Univ. in Virginia.