Economic analysis is a tricky business. By selecting the right data, an analyst can make any premise appear correct. One of the most blatant ways of doing this is to select the most recent data that supports the premise you want to illustrate.

The overall unemployment rate in the United States in September has been initially reported as 6.1%. This rate and the numbers behind it will be revised several times over the next few months, but let’s work with what we have.

The highest unemployment rate under George Bush was 6.3% in June of 2003. The highest under Bill Clinton was 7.3% in January 1993. June of 1992 was George Bush the elder’s high, 7.8%. Reagan’s high was in the two months of Novermber and December 1982, 10.8%.

The Economist defines full employment as:

Jobs for all that want them. This does not mean zero unemployment because at any point in time some people do not want to work. Also, because some people are always between jobs, there will usually be some frictional unemployment. Full employment means that everyone who wants work and is willing to work at the market wage is in work. Most governments aim to achieve full employment, although nowadays they rarely try to lower unemployment below the nairu: the lowest jobless rate consistent with stable, low inflation.

What unemployment rate can be considered “full employment”? Not zero, because there will alwyas be people changing jobs – frictional unemployment. There may not be a “full employment” rate because conditions change in the labor market, and in the business cycle overall that affect the labor market.

The Organisation for Economic Co-operation and Development (OECD) took a stab at it in 1999, with a “full-employment unemployment rate” of 4 to 6.4%. The problem with this estimate is that the extremely low unemployment rates of the late 1990′s failed to produce the expected inflation, suggesting that full employment may be an even lower rate, or else some major economic theories were all wrong.

The United States is now a post-industrial economy. The theories and norms for such an economy are new and untested. Most of what we have to work with are theories developed for an industrial economy and, as just described, they may no longer apply. The ties between inflation and unemployment may no longer be as they were in the 1960′s.

That statement has profound implications for the interest rate policies of the Federal Reserve, but that is another post indeed.

The following statements are true according to the data as presented.

An overall unemployment rate of 6.1% is well below all but one of the peaks in the last 28 years.

The September 2008 Black unemployment rate of 11.4% would have been a low from 1980 to mid 1994.

The September 2008 rate of Hispanic unemployment of 7.8% would be a low for all the months and years from mid 1980 through mid 1997 other than for a few months in 1990.

Unemployment rates have been worse in the last thirty years. For Blacks and Hispanics, the current rates are as close to record lows as they are to peak unemployment rates. Overall, it appears that unemployment rates are trending lower if you consider the period 1980 to date.

In this new economy, is there a trend we can determine? Or, are we still not far enough in to the post-industrial age to make such statements? For example, does this economy generate more jobs that come and go versus the industrial economy? Is it part and parcel of this economy that the job market will churn more and that jobs will have a finite life span resulting in higher unemployment?

Or, is the opposite true? Does the economy generate so many jobs that the unemployment rate will stay low despite any churning in the labor market?

The fundamentals of the American Economy are sound. They are. Unemployment is low. Inflation is low. Productivity is good. Interest rates are low. GNP numbers are ok.

It is not a crisis if economic measurements are not at historic numbers. Every week, every month, every year cannot set a new record. It is the trend that counts. The only trend damaging our economy at this time is that of government interference in the economy.

Accounting used to be simple, for a business. Then government felt that it had to step in. You may not realize the extent to which the current Wall Street debacle is the responsibility of government.

Government laws and regulations tell businesses how they are to value securities, even when that method makes no sense. You must value securities at market value. When there is a temporary glitch in the markets, the securities cannot be sold or can only be sold at a steep discount. They have no market value. Suddenly, the reserves that a business counts on to continue in operation vanishes in a pile of government red tape.

All market disturbances are temporary. Securities, mortgages, leases all have a value whether or not they can be sold at this moment. In a week, a month, a year, they could be sold and may even make a profit for the business selling them.

Government regulation wiped out the reserves of AIG and the other financial firms. Six months ago, they had reserves. Those same portfolios will also have value six months from now.

Sorry, Sarah and John. Sorry, Barry and Joe. We need less regulation in the markets, not more. We need less governmental interference. Let the markets determine the value of a securities portfolio.

Who killed the American economy? Let’s hope that it is not the United States government committing murder.