• Steve H. Hanke
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    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Does This Look Like A Recovery?

Tyler Durden's picture


Via Simon Black of Sovereign Man Blog,

A few years ago back when I used to watch an occasional bit of television, I would always have an internal debate with myself: which was more funny– Comedy Central, or CNBC?

It was always a toss-up. One channel has talking puppets. The other has Steven Colbert. Both are satires of our bizarre reality.

These days it seems financial media has surged ahead in this contest, rolling out one expert guest after another to beat a steady drum that economic recovery has settled on terra firma.

Now, I’m an optimistic guy... and there are plenty of good news stories around the world. But just looking at the numbers, it’s clear that there is a major disconnect between sentiment and reality.

On one hand, western governments and mainstream media sources tell people that their economies are recovering and moving forward. Sentiment is high, confidence is growing.

Unfortunately the data show a completely different story:

1. In the US, while the official unemployment rate is falling, a much better indication of the labor market is the Labor Force Participation Rate– the percentage of people within a society who are engaged in the work force.


It rose steadily for decades after World War II as more and more women entered the work force, peaking in the late 1990s/early 2000s. It has been in terminal decline for the past ten years, having now reached the same level as from the late 1970s.


labor force participation Does this look like a picture of recovery?


Mirroring this point is private sector data from Automatic Data Processing, the largest payroll services firm in the world. ADP regularly releases its own employment data– they are, after all, the ones who send out the paychecks...


According to ADP data, the number of people employed in the United States today (111 million) is roughly the same as in 2001. Yet back then, there were about 285 million people in the US. Today there are 315 million people.


So the conclusion is that there has been no growth in the number of jobs, far more people in the country, and far fewer of them ‘participating’ in the work force. This can hardly be called progress.


2. We’re also told that consumer spending is coming back. The US Commerce Department has reported that spending edged higher for the last several months, giving rise to even more optimism.


This may be true. However the other side to this story is that (a) US wages as a percentage of GDP are at a record low; and (b) consumer credit has been steadily rising since early 2011.


consumer credit Does this look like a picture of recovery?



So what we’re really seeing is US shoppers who are either unemployed or earning record low wages going deeper into debt to buy stuff. Somehow this is a source of optimism.


3. Since 2008, large US companies have been able to enjoy absurdly low interest rates, plus a very forgiving society when they lay off workers.


Clearly this combination of cheap capital, lower payroll expense, and consumers willing to indebt themselves to buy products is positive for corporate profits. But is it sustainable?


In the long run, are strong corporate profits underpinned by cheap funny money and bankrupt consumers? Or strong, vibrant, productive economies? I would suggest the latter.

This analysis isn’t intended to be negative; bear in mind, numbers don’t have feelings. Data is simply truth. But the gulf between truth and perception is now astoundingly vast. And there are dangerous consequences to this, just as we have seen in the recent past. Welcome to 2007 all over again.

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Thu, 01/17/2013 - 22:10 | 3164914 FL_Conservative
FL_Conservative's picture

Having a job and being able to pay for your way is SO 20th century.  I mean really........

Thu, 01/17/2013 - 22:15 | 3164937 SafelyGraze
SafelyGraze's picture

the good news from these charts is that, unlike in the past, people no longer need jobs in order buy things

Thu, 01/17/2013 - 22:24 | 3164965 derek_vineyard
derek_vineyard's picture

Less people working = more with liesure time.  Since the gubermint is footing the bill.....looks like progress to me.

Thu, 01/17/2013 - 22:31 | 3164982 Dr.
Dr.'s picture

Fig.1 is the Tranfer Fn of a LowPassFilter. Economy will continue on aslope at -20dB/2y ;-)

Thu, 01/17/2013 - 22:32 | 3164991 Thomas
Thomas's picture

Remember the old maxim that "you cannot reflate a bubble." That was probably as wrong as any maxim over the ages. These dickweeds at the FOMC and affiliated central banks are working on a whole series. They think they will eventually get it just right--the perfect bubble that won't burst. You betcha.

Thu, 01/17/2013 - 22:48 | 3165019 Dr.
Dr.'s picture

..you meant controlled burst. You make some the way up and a lot more down..

Fri, 01/18/2013 - 02:01 | 3165372 knukles
knukles's picture

Nothing is funny or amusing anymore.
It is truly frightening.


The big laugh can no longer cover the rot of the big lie

Fri, 01/18/2013 - 02:12 | 3165383 otto skorzeny
otto skorzeny's picture

americans love to be lied to and told that they will be safe forever-that is the job of the govt

Fri, 01/18/2013 - 08:22 | 3165622 GetZeeGold
GetZeeGold's picture



Naw, naw, naw.........I can't hear you.


I will tune to CNBC.....they will expose your vicious lies.

Thu, 01/17/2013 - 22:47 | 3165025 nmewn
nmewn's picture

The damned world is upside down I tell ya...even the ObamaFawn Lady has gotten religion...

"She was a protester outside of a Romney rally that was held in Cleveland, Ohio, and she explained to a filmmaker on how President Obama gives all minorities free phones and that is the reason why they should vote for him and not vote for Mitt Romney."

"Dowry went on to say of how President Obama did not do what he said he would do for her neighborhood and to help them. She said after five years now, nothing has changed and her and husband are still in the same situation as they were before."


Insanity! ;-)

Thu, 01/17/2013 - 23:19 | 3165102 A Lunatic
A Lunatic's picture

Obama must be rayciss............

Thu, 01/17/2013 - 23:33 | 3165125 Freddie
Freddie's picture

These days it seems financial media has surged ahead in this contest, rolling out one expert guest after another to beat a steady drum that economic recovery has settled on terra firma.

F CNBC/BloomTurd, ALL of TV, All of Hollywood.  They are all the CIA's Operation Mockingbird.


Endless lies and propaganda to the retards who watch TV and Hollywood's shit.  If you watch then you enabled your serfdom.

Thu, 01/17/2013 - 23:34 | 3165126 ZeroAvatar
ZeroAvatar's picture

tOmBama doesn't give a snake's shedded skin about black people.

Thu, 01/17/2013 - 23:37 | 3165138 Harbanger
Harbanger's picture

She would vote for him again in a second.  Democrats enjoy something 96% of the black vote and yet they have single handedly done more to destroy their families and communities than anyone.  Some Democrat districts had more votes than registered voters but that's another story.

Fri, 01/18/2013 - 02:05 | 3165377 knukles
knukles's picture

96+% of the black vote.
Now tell me that's not racist, is humorous and should not be addressed for we must not make them mad at their own feelings.

To paraphrase Yeats; "There is no center left to hold."

Fri, 01/18/2013 - 02:11 | 3165382 otto skorzeny
otto skorzeny's picture

they would have voted for fucking OJ

Fri, 01/18/2013 - 02:31 | 3165403 MisterMousePotato
MisterMousePotato's picture

Or, if I might try my hand, "The center did not hold." (Which, I guess, makes sense in that his observation was that the center cannot hold. I guess he was right.)

Fri, 01/18/2013 - 10:49 | 3166014 GeezerGeek
GeezerGeek's picture

Blacks can't be racists, by definition. Only Caucasians, and maybe Asians, can.

Thu, 01/17/2013 - 23:02 | 3165064 fuu
fuu's picture

Filter sweep that thing with a VWAP and we got bass drops.

Fri, 01/18/2013 - 11:28 | 3166177 Metalredneck
Metalredneck's picture

Time for a band pass.

Fri, 01/18/2013 - 10:12 | 3165854 yogibear
yogibear's picture

With all the SSDI, welfare Cell phones, free rent you make out. You loose if you work.

Besides you have Bubble Bernanke and the Fed to buy-up all the debt with printed money.

It's like fantasy land but real.

Thu, 01/17/2013 - 23:45 | 3165157 El Oregonian
El Oregonian's picture

Well, Polly Anna Bartiromo and her Rose-Colored glasses says everything is just fine...

Fri, 01/18/2013 - 02:13 | 3165384 otto skorzeny
otto skorzeny's picture

if I hear "we're off the lows of the day" from her fat lips  one more time I'm gonna lose it

Thu, 01/17/2013 - 22:10 | 3164915 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

It is recovery of the wealthy US citizen's money. For the rest of us, tough luck.

Thu, 01/17/2013 - 22:11 | 3164918 Dieselclam
Dieselclam's picture

It this "recovery" was in a hospital, it would already have a toe tag.

Thu, 01/17/2013 - 22:12 | 3164925 ThePhysicist
ThePhysicist's picture

But, the talking heads say life is good, the recovery is rolling along.

Thu, 01/17/2013 - 22:13 | 3164928 monopoly
monopoly's picture

And so it begins....Again.

Thu, 01/17/2013 - 22:14 | 3164931 mayhem
mayhem's picture

so there is no spoon?

Sun, 01/20/2013 - 05:43 | 3170305 MeelionDollerBogus
MeelionDollerBogus's picture

no spoon? From what the Mint is saying there isn't even any silver to make into spoons, that's how far this one's gone.

Thu, 01/17/2013 - 22:17 | 3164932 fourchan
fourchan's picture



numbers no longer matter, the debt, mark to market, the market,

its all a ponzi bubble being pumped up by the fed, maybe it always was?


buy the fucking dip.

Thu, 01/17/2013 - 22:14 | 3164933 q99x2
q99x2's picture

There is not enough assets in the economy to keep the banks from imploding since GDP is falling below 2%. The reality (ex Gov't statistics) is that banks are out of fuel for their ponzi, the implosion has started and will rapidly accelerate. The Ice-9 Cometh. 

Thu, 01/17/2013 - 22:24 | 3164959 darteaus
darteaus's picture

A better stat, IMHO, would be total compensation paid by employers.

An ER doctor could now be a Starbucks barista, and, using the article's calculations, one job = one job.  Using reported income, while not perfect, would act as a proxy for the relative value consumers are indirectly willing to place on the relative value of the workforce's output.  So, an ER doctor's compensation would be higher than a Starbucks barista, signaling a greater value being produced.

Thu, 01/17/2013 - 22:42 | 3165007 secret_sam
secret_sam's picture

Someone (Williams or Biderman or?) should try to get a clinical read on "take-home income" vs. "compensation paid" by employers. 

Fri, 01/18/2013 - 09:17 | 3165700 Poetic injustice
Poetic injustice's picture

While barista could receive "3 week intensive training" and go work in a hospital as doctor for minimum wage, helping poor people.

Thu, 01/17/2013 - 22:26 | 3164972 Falconsixone
Falconsixone's picture

51 months ago I paid the tax man and had a good job. Since then I've been Odd Job (since I can do anything) and can't see myself going to work again for the people who stole my life (I thought the field was level as a truthful fool does). So if they plan on me working for them you people should invest in whips (that won't work either). ie:fuck'em

They lost my ability (they don't care) and a shit load of taxes (I think they may care but they built the system). 

Fri, 01/18/2013 - 02:54 | 3165426 SheHunter
SheHunter's picture

Well said Falcon.  Same here in my life.  And I second your fuck-'em.  Bit once shame on me...bit twice F'em.

Thu, 01/17/2013 - 22:28 | 3164976 cnhedge2
cnhedge2's picture

right, it's not sustainable. http://www.cnhedge.com

Thu, 01/17/2013 - 22:31 | 3164983 tooriskytoinvest
tooriskytoinvest's picture

We’re Now In The Eye Of The Perfect Storm: Europe’s Banking System Is Breaking Down Again,  APPLE Is Following An Ominous Path, China Trust Loans Jump Sevenfold, And Several Measures Of Market Sentiment Are Now Hitting Extremes


Thu, 01/17/2013 - 22:31 | 3164985 IridiumRebel
IridiumRebel's picture

This economy is like the drunk that keeps showing up to AA meetings with vodka on the breathe.....swearing he has been straight and recovering while everyone isn't looking, slipping into the liquor store for another pint.

Sun, 01/20/2013 - 05:38 | 3170303 MeelionDollerBogus
MeelionDollerBogus's picture

That was Yesterday.

Now the Bernank is handing out Vodka labeled "instant sobriety tonic" written in his handwriting in the AA meetings.

Thu, 01/17/2013 - 22:32 | 3164990 earleflorida
earleflorida's picture

excellent resourcing of the 'grey matter', mr. black... in a BL$`world, that counts only the "Xs & Os"-- as that of an idiot`savant trolling his alphabet soup-bowl with a straining ladle!

Thu, 01/17/2013 - 22:36 | 3164996 A Lunatic
A Lunatic's picture

A nation that is afraid to let it's people judge the truth and falsehood in a open market is a nation that is afraid of it's people.     -John F. Kennedy-

Thu, 01/17/2013 - 22:48 | 3165021 AgAu_man
AgAu_man's picture

I liked JF Kennedy.  I still like the Kennedy's.  Especially the silver Kennedy's at home.

Whenever I look at them, they seem to ask me: "What can we do for you?".  One day I plan to answer them.

Fri, 01/18/2013 - 01:28 | 3165335 Hangfire
Hangfire's picture

Yes, I like the Kennedy's and the Franklin's, I consider them my junk friends!   

Thu, 01/17/2013 - 22:55 | 3165049 darteaus
darteaus's picture

It's a nation of politicians and banksters afraid of not being able to continue the grand rip-off.

Thu, 01/17/2013 - 23:47 | 3165161 Freddie
Freddie's picture

Funny you mention JFK.  Talk about connections.  CIA Operation Mockingbird to lie to the sheep who watch TV and Hollywood's shit.  Including the endless lies on CNBC and BloomTURD.   Keep watching TV and Hollywood - they need sheep/serfs watching.


In 1951, Allen W. Dulles persuaded Cord Meyer to join the CIA.  According to Deborah Davis, Meyer became Mockingbird's "principal operative"   Congressional hearings in 1976 proved the CIA had been paying off editors and reporters in most mainstream media outlets.

So who was Cord Meyer?  Well JFK was sleeping with his wife.  Probably a big mistake there. 


Big mistake by JFK and Mrs. Cord Meyer.  The Kennedys had a real talent for getting into bed with gangsters and lowlifes plus the wives of powerful people and starlets.   People then ended up dead.  Like Marilyn would had a drug & booze problems, low self esteem and a big mouth.  



Fri, 01/18/2013 - 00:10 | 3165207 willwork4food
willwork4food's picture

Yes, but that "mouth", sure helped to advance her carreer..

Thu, 01/17/2013 - 22:37 | 3164997 Seasmoke
Seasmoke's picture

I always was afraid of not working. Never has there been a better time in history not to work.

Thu, 01/17/2013 - 22:51 | 3165039 AgAu_man
AgAu_man's picture

Indeed.  I hear that even as far back as the days of the Pharaohs, there was plenty of work.  Especially in those days, and in the days of many a monarch.

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