Magic Growth Numbers From The Government

Magic Growth Numbers From The Government

http://www.paulcraigroberts.org/2014/12/26/magic-growth-numbers-paul-craig-roberts/

By:  Dr. Paul Craig Roberts, Former Assistant Secretary of the Treasury under Ronald Reagan

Everyone wants good news, so the government makes it up. The latest fiction is that US real GDP grew 4.6% in the second quarter and 5% in the third. 

Where did this growth come from?

Not from rising real consumer incomes.

Not from rising consumer credit.

Not from rising real retail sales.

Not from the housing sector.

Not from a trade surplus.

The growth came from a Bureau of Economic Analysis survey of consumer spending on services. The BEA found that spending on Obamacare drove the US real GDP growth to 5% in the third quarter. http://www.zerohedge.com/news/2014-12-23/here-reason-surge-q3-gdp

In America, unlike in other countries, a huge chunk of medical spending goes to insurance company profits, not to health care. Another big chunk goes to paperwork, which has a variety of purposes such as collecting personal information on patients and combating fraud (probably the paperwork costs more than fraud). Another chunk goes for tests and procedures in order to justify further procedures. For example, if a doctor thinks a patient’s diagnosis requires a MRI, he must often first order an x-ray to establish that a cheaper procedure does not suffice. If a cancerous skin growth needs to come off, first a biopsy must be done to establish that it is a cancer so that a needless removal is not performed. And, of course, medical practicians must order unnecessary tests in order to protect themselves from the liability of relying on their medical judgment. 

To regard any of these expenses as economic growth is farfetched.

There are sampling and other problems with the survey of personal consumption, and apparently Obamacare spending was all dumped into the third quarter. Why the third quarter?

The answer is that the illusion of economic recovery must be kept alive. 

Real GDP growth of 5% in the third quarter is inconsistent with the sharp fall in key industrial commodity prices. It is not only oil (down 47%) but iron ore prices (down 49%), natural gas (down 30%), copper (down 15%). Pam and Russ Martens show that the fall in the producer price index for industrial commodities in 2014 is sharper than in 2008, the year of the crash. http://wallstreetonparade.com/2014/12/oil-crash-dont-believe-the-happy-clatter/
With 30% of 30-year old Americans and almost 50% of 25-year olds living with parents, with debt-based derivative instruments impacted by falling oil and industrial commodity prices, with the likelihood that the US and EU economic attack on Russia will fuail and perhaps produce retaliatory measures that could bring down the European banking system, look for 2015 to be the year that Washington will cease to get away with its economic lies. 

The financial media and Wall Street economists by refusing to ask obvious questions have left the American people unprepared for another drop in their living standards and ability to cope.

A question of believing what you're told or what you see . . .

The BLS reported 321,000 jobs added in November and the unemployment rate at 5.8%. Jobs are plentiful, based upon these statistics. 

A skeptical critical thinking individual might ask a few questions or point out a few inconvenient facts the purveyors of propaganda might not want us to ponder:

• The non-manipulated, non-seasonally adjusted number of jobs in November FELL by 270,000. The BLS added 600,000 jobs as an adjustment to achieve the headline grabbing result.
• If the jobs market is so good, why is the labor participation rate at a 30 year low of 62.8%?
• Since 2007 the number of working age Americans has risen by 17 million, while the number of employed has risen by less than 1 million, but the unemployment rate is about the same.
• Why would almost 14 million working age Americans leave the labor force since 2007 if the economy is booming and jobs plentiful, with 1.2 million leaving in the last 12 months?
• Why would payroll tax receipts be flat with last year if millions of new jobs have been created?
• If the country has really added 8 million jobs since 2010, how could real median household income FALL by 2.3%?

And the unemployment numbers are not the only spun data we receive (and many rely upon) monthly.  

Politcally charged but well-researched and passionate, I commend this article to your review:  http://www.theburningplatform.com/2014/12/11/should-you-believe-what-they-tell-you-or-what-you-see/

Another Fabricated Jobs Report (Paul Craig Roberts)

Paul Craig Roberts was the Assistant Secretary of Treasury under President Reagan and a former editorial writer for the Wall Street Journal. What follows comes from his blog the link to which follows the article.

Friday’s payroll jobs report is another government fairy tale or, to avoid polite euphemisms, another packet of lies . . .

First, let’s pretend that the 321,000 new jobs that the government claims the economy created in November are true, and let’s see where these jobs are.

Specialty trade contractors, which I think are home and office remodelers, accounted for 20,000 jobs. I doubt that people are putting money into houses and buildings that are worth less than the mortgage.

Manufacturing accounted for 28,000–a very high monthly figure for recent years, one that is unbelievable in view of the rise in the trade deficit and declines in consumer spending on furniture (-3.8%), major appliances (-8.3%), women’s apparel (-17.7%), and household textiles such as towels and sheets (-26.5%), and when US business investment consists of corporations repurchasing their own stocks.

The rest of the claimed jobs are in private domestic services, that is, they are third world jobs. Retail trade claims 50,200 and transportation and warehousing claims 16,700. These numbers are impossible to believe in view of the closings of middle class department stores and Black Friday and Cyber Monday sales flops.

Financial activities claims 20,000, most of which appear to be insurance related–perhaps the growth of Obamacare bureaucracy.

Professional and business services claims 86,000, a very large number for recent years. What are professional and business services?

Professional and business services are “accounting and bookkeeping services” (16,400 jobs)–a possible (temporary) increase as W2s for 2014 are coming due to be issued–and ”administrative and support services (40,600 jobs)–mainly temps.

Next we come to “health care and social assistance” with 37,200 jobs concentrated in “ambulatory health care services” and “social assistance.”

Then we have “food services and drinking places” with 26,500 claimed jobs.

Bringing up the rear is Government employment with 7,000 jobs.

What are we to make of these job claims?

It is unlikely that there were 26,500 new jobs for waitresses and bartenders when consumer spending on restaurants, alcohol, and entertainment declined by 3.8%, 4.5%, and 5.4%. http://www.zerohedge.com/news/2014-12-02/middle-class-spending-crash-explained Restaurants and bars do not hire more people when demand is dropping.

No one hired 50,200 new retail clerks when anchor stores of shopping centers are closing and strip malls stand abandoned in unfinished construction.

If we are sufficiently gullible to believe the BLS jobs report of 321,000 new jobs in November, we should be disturbed that the vast bulk of the jobs are third world domestic service jobs that do not produce exports to offset the massive trade deficit of the US offshored economy. Moreover, the majority of these jobs do not produce sufficient income for a person to establish a household or qualify for a mortgage or car loan.

America is bleeding herself dry so that corporate executives and shareholders can live the high life on bonuses and capital gains resulting from exploited foreign labor and the destruction of the American middle class.

Now, let’s move on to other conclusions. John Williams, an expert on government statistical data, points out, ignored of course by the presstitute media, that full-time employment in America today is 2,400,000 less than employment in 2007.

What this means is that the US is short 2.4 million jobs from 7 years ago. So how is there an ongoing recovery? In the meantime the population has grown.

Remember, the official unemployment rate is low, because discouraged workers who cannot find jobs are not counted as unemployed. To be counted as unemployed, you have to be actively searching for a job. As job search is expensive and unemployed people have no money, when job search produces no results people give up. They are unemployed but not counted as such.

John Williams points out that most of the 321,000 new jobs were created by manipulating seasonal adjustments and by the birth-death model that arbitrarily adds jobs that the BLS model assumes were created that month. The BLS never provides any proof of those phantom jobs.

John Williams also points out that many of the payroll jobs are part-time jobs and one person often has several jobs. As no one can live on one part time job, many households and individuals are sustained by multiple part-time jobs. The jobs are not a measure of the number of employed, because many persons hold several jobs in order to make ends meet.

Keep in mind that much of the increased activity in the highly touted payroll employment numbers is tied to multiple part-time jobs held by individuals. In other words there is double and triple counting of those employed.

The entire article is here: www.paulcraigroberts.org/2014/12/07/another-fabricated-jobs-report-paul-craig-roberts/

It Could Be Worse. You Could Be A Millenial

The latest Census numbers show Americans aged 18 to 34 struggling worse than their parents did in the '80s.

Millennials make less money, are more likely to live in poverty and have lower rates of employment than their parents did at their ages 20 and 30 years ago.

That’s the bleak assessment from the U.S. Census Bureau’s latest American Community Survey numbers Thursday, which paint a financially disheartening portrait of Americans aged 18 to 34 who are still trying to rebound from the Great Recession.

More of the raw (and ugly) numbers here: http://time.com/3618322/census-millennials-poverty-unemployment/

Full-Time Jobs Down 150K, Participation Rate Remains At 35 Year Lows, "No Job Market For Young Men"

While the seasonally-adjusted headline Establishment Survey payroll print reported by the BLS moments ago may be indicative of an economy which the Fed will soon have to temper in an attempt to cool down, a closer read of the November payrolls report shows several other things that were not quite as rosy. 

Indeed, looking at the numbers behind the headline number illustrates a slow-motion train wreck.

First, the Household Survey was nowhere close to confirming the Establishment Survey data, suggesting jobs rose only by 4K from 147,283K to 147,287K, and furthermore, the breakdown was skewed fully in favor of Part-Time jobs, which rose by 77K while Full-Time jobs declined by 150K.

And then for those keeping tabs on the composition of the labor force, the same adverse trends indicated over the past 4 years have continued, with the participation rate remaining flat at 62.8%, essentially the lowest print since 1978, driven by a 69K worker increase in people not in the labor force.

Article here:  http://www.zerohedge.com/news/2014-12-05/full-time-jobs-down-150k-participation-rate-remains-35-year-lows

White House plans to force business to pay more overtime

President Obama early next year will try to force employers to pay their workers more overtime by limiting which workers can be called "managers."

The administration in February is set to announce a proposed new rule under the Fair Labor Standards Act that would designate who is an “exempt employee” who cannot claim overtime for working more than 40 hours a week.

Blowback?  Absolutely.  Anticipate managers who do meet the new standard to be required to supervise more employees and existing managers and supervisors who do not meet the new standard to be put on the street.  

http://www.washingtonexaminer.com/obama-plans-to-force-overtime-payments-up/article/2556692

Updated: San Francisco and Seattle Go Head To Head For Most Unfriendly To Employers City

Updated to include links . . . (See below)

San Francisco is in head to head competition with Seattle to see which city can become a monument to socialism, to become the most employer-unfriendly city in the United States. (See link below). Both will reap what they sew when the next recession hits and more employers in both cities pull up stakes and leave. It will serve those local governments right. Unfortunately, by increasing the minimum wage and piling regulation upon regulation they are creating a permanent underclass, many of whom will never be employed simply because it becomes too expensive.

With 100 million Americans at least using one welfare program, 50% of American workers earning less than $28,000 dollars a year, and total U.S. household debt at $11.7 trillion dollars, such legislative attempts portend more of the same until it collapses.

Article on San Francisco's Bill Of Rights:  http://dailycaller.com/2014/11/26/san-francisco-passes-retail-worker-bill-of-rights/

Video on the state of the American employee:  http://youtu.be/3-5oK2lZk4c

San Francisco and Seattle Compete For Most Employer-Unfriendly City

Updated to include links . . .

San Francisco is in head to head competition with Seattle to see which city can become a monument to socialism, to become the most employer-unfriendly city in the United States. (See link below). Both will reap what they sew when the next recession hits and more employers in both cities pull up stakes and leave. It will serve those local governments right. Unfortunately, by increasing the minimum wage and piling regulation upon regulation they are creating a permanent underclass, many of whom will never be employed simply because it becomes too expensive.

With 100 million Americans at least using one welfare program, 50% of American workers earning less than $28,000 dollars a year, and total U.S. household debt at $11.7 trillion dollars, such legislative attempts portend more of the same until it collapses.

Article on San Francisco's Bill Of Rights:  http://dailycaller.com/2014/11/26/san-francisco-passes-retail-worker-bill-of-rights/

Video on the state of the American employee:  http://youtu.be/3-5oK2lZk4c