Salve for the Battered and Bruised American Psyche
By Tim Triplett, Editor-in-Chief
The American psyche has taken a beating of late, repeatedly pummeled by headlines of economic doom and gloom. But take heart, say two popular economists. Chances are the headline writers had no idea what they were talking about.
As Glenn Kidd and Chris Kuehl pointed out during their remarks March 4 at FMA’s Toll Processing Conference in Orlando, 90 percent of economics is psychology—and the media’s misinterpretation of economic statistics is often the cause of unnecessary psychological damage. “Economies rise on optimism and fall on fears and anxiety. Beware of the headlines,” said Kidd, a steel industry analyst and former economist for U.S. Steel.
Press coverage of the unemployment problem is one example. While it is indisputable that the nation’s joblessness is a major drag on economic growth, Kuehl offered some additional perspective. As a partner in his own consulting firm, Armada Corporate Intelligence, Kuehl is considered unemployed using government standards. Likewise for Kidd, who is retired and now self-employed. In fact, Kuehl said, government unemployment figures still include the nine million entrepreneurs who have started their own businesses in the past two years.
Also making the labor situation appear worse is the government’s measurement of the underemployed. “There is no way to tell how many part-time workers want to be employed full time, so the system assumes they all do. They are even counting that 16-year-old kid who works 10 hours a week at Sonic. He doesn’t want to do that full time,” Kuehl said.
The widespread perception that the labor market has never been in worse shape fails to factor in the many changes in the methodology used by the government to measure it over the past 20 years. “If you use the system that is in place today and retroactively look at the recession in 1980, the unemployment rate would have been 22 percent, not 12 percent,” Kuehl said. “So when people say the current recession is the worst ever—no it’s not.”
“We bring this up to raise your psychological well being by reminding you that you work in one hell of a country and you are in one hell of an industry,” Kidd told the crowd of steel processors. “You should not feel down just because we are having a temporary lull in our overall robust activities.”