We all know that individual numbers can mislead. Low-carb doesn’t mean food is healthy, good gas mileage doesn’t mean a car is high-quality, and we’ve all said “sure but it’s a dry heat” at some point or another.
Somehow this simple wisdom is regularly ignored in Raleigh, with a lot of leaders cherry-picking individual data points to justify claims that our economy is doing great (it isn’t). New data released over the last week show that leaning too heavily on individual statistics is sloppy thinking, bad economics, and can lead to blatantly misleading proclamations.
First, August showed once again that the headline unemployment rate doesn’t tell the whole story. The unemployment rate has declined slightly over the last few months, but the number of jobs in the state has actually been basically flat, or even down. This might seem contradictory, but is really just a quirk of how the unemployment rate is calculated. As any economist will acknowledge, the headline unemployment rate does not really count all of the people who can’t find a job.
As shown here, when you include the thousands of North Carolinians who have dropped out of the labor force (missing workers), unemployment in North Carolina is probably more than double the official rate. This is no surprise to most people who follow economic data closely, and certainly isn’t news to the hundreds of thousands of North Carolinians who can’t find decent work, but it stands in stark contrast to the happy tune some folks in Raleigh have been whistling lately.
We see more of the same when it comes to income. Early last week, a number of leaders in Raleigh claimed that median income grew faster in North Carolina than any other state over the last few years. Sounds great, but its also not true. Those assertions were based on using the wrong survey, and when the more reliable data came out it showed that North Carolina has posted one of the worst rates of income growth in the nation since 2013.
Mistakes happen, and sometimes even the best data does not reveal the full truth, but relying on an individual statistic can often cross from error into recklessness. Until leaders honestly face the fact that our economy is far from healthy, we won’t get down to the real work of fixing it.
The next time someone tells you our economy is red hot, ask if that’s a dry heat.