Bureau of Labor Statistics
After every non-farm payroll report we provide our own breakdown of what the real unemployment rate is in a country in which the labor force participation rate has not been adjusted to normalize for the Second Great Depression. In the most recent such endeavor we found the "Real Unemployment Rate" to be 11.3%. Today, courtesy of the Post's John Crudele we find that our estimate was spot on not just from anyone, but the former head of the BLS himself: Keith Hall.
On one hand restaurants and bars have been a boon to the US economy. As first reported in June, and updated two weeks ago, America's waiters and bartenders (increasingly more of which are part-time) have made up a disproportionately large portion of job creation in the nation, rising by more than 50,000 on average each month in the last three, and hitting an all time high of 10.34 million workers in July, accounting for 9% of all private-sector payrolls. The surge was enough for Joel Naroff of Naroff Economic Advisors to conclude that "Apparently, people are eating out again like crazy." It turns out this conclusion was 100% wrong. According to this week's very weak retail sales report, Food-service sales fell 1.2% in June, the largest decline since February 2008 and the year over year change in "eating out" rose by just 3.1% - the lowest annual increase since June 2010. But at least all those empty restaurant seats have a record number of waiters catering to the non-existent clients which on the surface should mean the speediest service in history.
The mainstream media is claiming that "The aggregate amount of money in paychecks is increasing about twice as fast as GDP." Rising aggregate household income doesn't tell the real story, which is: 1. Most of the income gains flow to the top 10%; and 2. Thanks to rising taxes, healthcare and other costs, household net income for the bottom 90% is declining. The mainstream media's parroting of aggregate household income increases is used to suggest the economy is improving. But the truth is the economy is only improving for a thin slice of households.
The concept we call gross domestic production (GDP) is highly distortive. It obfuscates intelligent debate in economics as the true underlying force for economic growth, capital accumulation, is seen as detrimental to prosperity
For those who don't eat or use energy: feel free to stop reading now - your inflation came in just as expected, at 0.2% up from May, and 1.6% higher compared to a year ago. However, those unlucky few who are forced to eat, use and A/C and/or commute, your inflation just saw its biggest monthly hedonically-adjusted jump (don't forget the deflationary impact of that 80 inch LCD TV you have zero intention of buying), or 0.5%, since February's 0.7% and well above the 0.3% expected. This was driven by a 6.3% surge in gasoline prices, and a nat gas price index soaring 11.7% leading to a 3.4% increase in Energy prices, even as the Food increase of 0.2%, tied for the highest since December 2012 was subdued. And while non-food and energy components did not see major spikes, June apparel prices jumped 0.9%, the highest since 2012, as did Medical Care Commodities and Services, rising 0.5% and 0.4% respectively, both posting the highest M/M jump since well into 2012.
No, last week’s jobs report was not “strong”. It was just another edition of the “born again” jobs scam that has been fueling the illusion of recovery during the entire post-crisis Bernanke Bubble. In short, the US economy is failing and the welfare state safety net is exploding. And that means that the true headwind in front of the allegedly “cheap” stock market is an insuperable fiscal crisis that will bring steadily higher taxes, lower spending and a gale-force of permanent anti-Keynesian austerity in the GDP accounts. And for that reason, the Fed’s strategy of printing money until the jobs market has returned to effective “full employment” is completely lunatic. The bottom-line is that Bernanke is printing money so that Uncle Sam can keep massively borrowing, and thereby fund a simulacrum of job growth in the HES Complex. Call it the Bed Pan Economy. When it finally crashes, Ben Bernanke will be more reviled than Herbert Hoover. And deservedly so.
Over the past week there has been some speculation whether the number of Americans who receive food assistance and/or are on disability, outnumber full-time employed workers in the US. Here is the answer.
One minute we hear that Quantitative Easing is going completely, then it’s going a bit and withdrawing in side-steps and little paces and then it’s going to carry on. Where do we stand?
Now that Bernanke has thrown in the towel and reverted back to the old bad news is good news regime (or did he - GETCO's vacuum tubes at least sure seem to think so), there was hardly anything more the market could ask for than a horrible Initial Claims print. It got just that with today's initial unemployment claims which soared from last week's upward revised 344K (only +1k revision this time) to 360K, well above the consensus (and Joe LaVorgna) forecast of 340K. Sure enough, the BLS said the July claims were difficult to seasonally adjust, so let's look at the NSA claims which jumped by 49,778 in the week ended July 6 to 384,829 making one wonder if the BLS' instruction in the holiday shortened week was to actually represent a worse economic reality unlike during the Obama pre-reelection months. The only other notable item in the report was the ongoing drop in Extended claims, with EUCs down by 23K to just 1.6 million, 1 million less than a year ago as claims exhaustion means ever more people drop out of the official labor pool. Permanently.
In a surreal and deja vu-ish turn of events, three days ago we reported that in parallel with the ongoing collapse in CNBC viewership, the ratings of some of its shows namely Jim Cramer's Mad Money and Larry Kudlow's Report had just hit all time lows. This was met with an immediate response by Larry Kudlow himself who, alongside Groundhog Phil-fodder Joe LaVorgna, decided to take Zero Hedge to task for reporting that part-time jobs are not really full-time jobs and invited us over to their show to explain how dare we point out the weakness in the manipulated BLS datadump. We were kind enough to remind Mr. Kudlow that the last time someone from CNBC "invited" us over, i.e., Dennis "Digital Dickweed" Kneale, their show was promptly cancelled. To wit: "While we appreciate the offer, the last thing we intend to do is suffer Mr. Kudlow the same fate as that experienced by his predecessor Dennis Kneale who also invited Zero Hedge on his laughable excuse for a show in 2009, only to be sacked a few months later." Make it two for two as irony strikes again. The NY Post reports that Kudlow's show is over.
As the EU agrees to fund another bailout deal to help Greece rise from the ashes, providing them with another $8.7 billion in financial aid, the question that begs an answer is: will this have any effect on the austerity that is being imposed on the country. Throwing good money after bad?
While we have already extensively deconstructed the quality components of jobs in the US, showing first that in June 240K full time jobs were lost, even as 360K part-time jobs were "gained", and second that so far in 2013 only 130K full time jobs have been added offset by 557K part-time jobs, we had sinking suspicions that there was something off with the quantity component as well: after all, at an average monthly gain of precisely 201.8K jobs in the past six months (or in 2013), this number seemed just a little too perfect considering the Fed's implicit target of generating just over 200K jobs in a half year period before it begins tapering, which in light of declining gross issuance and less monetizable instruments, has been the Fed's goal all along. Today, courtesy of the monthly JOLTS survey we got just the confirmation we needed that, indeed, the official non-farm payroll number as per the Establishment Survey has been substantially off to the tune of a whopping 40% above what is quantitatively happening in reality.
While global equity markets (alone) celebrated what appeared to be a somewhat lackluster jobs data dump yesterday, it's not all rainbows and unicorns for the US employee. It is not just manufacturing jobs that are bleeding (as bartenders and waitresses surge), but the following 14 professions have been in decline for the last decade and are projected to drop even further going forward. From shipping clerks to sewing machine operators and typists, the new normal looks a little different from the old normal of the last century.
Benjamin Strong was near the end of a long stint as head of the New York Federal Reserve Bank (he passed away in October 1928), where he enjoyed the same immense power that Ben Bernanke has today. The economy had just begun to recover from a recession in December 1927, and there was much unemployment and spare capacity.... Agriculture was booming during and immediately after World War I, based on thriving exports to Europe. Overinvestment during the boom then gave way to stagnation in the 1920s. Europe was in a bad state in the late 1920s, just as it is now. What’s more, two of the world’s three largest economies are now in Asia, and these economies face similar challenges to those of 1920s Europe. While analogies are never perfect, the parallels with early 1928 are troubling. When the world slipped into depression in the late 1920s and early 1930s, it was on the back of imbalances and debt overhangs that are oddly similar to those that we face today.