A long trail of Slog posts from January onwards have ploughed a steady but pretty lonely furrow saying that the US ‘recovery’ data was selective, optimistic, and altogether something of a mirage. Now the rest of the Commentariat are catching on.
‘Yesterday we had the latest round of US Labor statistics to get excited about. ‘Unemployment near to 3-year low’ trumpets the main business page Reuters headline this morning GMT. But all things are relative: the rate is still 8.5% of all working age Americans. 1 in 12. In pure numbers, that’s 13.1 million. Go the the official Labor Statistics website, and you’ll read this:
‘The jobless rates for adult women (7.9 percent), teenagers (23.1 percent), whites (7.5 percent), blacks (15.8 percent), and Hispanics (11.0 percent) showed little change…..The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 5.6 million and accounted for 42.5 percent of the unemployed.’
‘US economy gains steam as 200,000 jobs are added’ headlined the New York Times business page today. But in tiny, light-blue print underneath, an associated story reads ‘Market Response Tepid To U.S. Labor Report’…
The picture that emerges is one of seasonal gains in employment, and very little more. But there is also an undercurrent of fiddling too. Not mentioned in the headline figures, for example, is a whopping group (2.5 million) described as ‘marginally attached to the economy’. Actually, they too are unemployed folks, but kind of off-balance sheet to use the common spin vernacular. They are defined thus: (my italics)
’2.5 million persons were marginally attached to the labor force in December, little different from a year earlier. These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.’
‘If the US economy really is creating jobs, then you’d expect the rate of creation to be up there with growth. But it isn’t. In the last quarter of 2011, American economic growth was recorded as 2.8%. In that period, roughly 145,000 jobs were ‘created’ according to the Labor stats. That adds up to a 0.3% growth in jobs. New technology to cut costs is gradually rendering more and more of middle class America unemployed. 243,000 jobs were ‘created’ in January alone – still only a 0.5% increase.’
‘New orders for durable goods fell in January 2012 by 4% – the largest drop for three years. And a separate report showed US property prices falling sharply during December 2011.
The latter data set wasn’t that unexpected – to me, anyway: pre-Christmas flatlining property markets are not exactly new. But durables are always a key indicator of how happy people are to spend big bucks on big things. They’re a reflection of confidence….or lack of it.’
‘The growth figures have been sexed up, the unemployment numbers deliberately misread, and now the Federal Reserve has confirmed that America is out of the woods: the vast majority of Fedders think QE has done its job, so it’s onwards and upwards….The US establishment media went to town during January 2012, making some outright silly extrapolations from extremely flakey jobs and purchasing index data. But [Bernanke] wasn’t having any of it. At the February FOMC, he talked of an improvement in employment, but described it as “far from normal”….perhaps his polite way of saying he didn’t buy the US Labor Department’s interpretation either. The Fed Chairman rounded off his piece by saying he believed “healthy job growth requires stronger economic growth, and currently I do not see job growth in line with the current trend in GDP growth.” Yesterday, the overwhelming majority media view was to interpret the ditching of QE3 as ‘no longer necessary’. I don’t.’
‘As early as 2010, I posted that a domestic consumption recovery in America would just make the debt worse. The trade figures are proving the point in spades.Despite the value of the dollar being down 3.3% against a basket of currencies, the trade deficit widened more than forecast in March as American demand for crude oil, computers, automobiles and televisions raised imports to a record. The gap grew 14% to $51.8 billion, the Commerce Department reported in Washington today. A 5.2% leap in imports, the biggest in more than a year, dwarfed the 2.9% gain in exports.
‘Not only is the US consumer buying more imported goods, the cost of raw materials is costing US business more as the Buck weakens. Crude oil imports in March increased to $29.2 billion from $23.4 billion the previous month, reflecting higher costs. The increase in imports was broad-based with demand for foreign-made computers, telecommunications gear, automobiles and parts, televisions, cellular phones and clothing all doing better than ever.’
So today, July 6th 2012, people are getting a little more grown up and suspicious about the Black Dude’s ‘recovery’. This time, Bloomberg refused to put out more flags:
‘Payrolls rose 80,000 last month after a 77,000 increase in May, Labor Department figures showed today in Washington. Economists projected a 100,000 gain, according to the median estimate in a Bloomberg News survey. The unemployment rate held at 8.2 percent. Private employment, which excludes government agencies, increased 84,000 in June, the weakest in 10 months….Stocks fell on concern hiring has shifted into a lower gear, restricting consumer spending and leaving the economy more vulnerable to a global slowdown. The figures underscore concern among some Fed policy makers that growth isn’t fast enough to lower unemployment stuck above 8 percent since February 2009…’
‘Anxiety mounts as US limps into second half of Year’ said Reuters, adding ‘From manufacturing to job growth to consumer spending, the numbers have been grim, and economists are wondering whether they need to dial down forecasts for the remainder of the year….’
Maybe they should never have dialled up La-la Land in the first place.
Fab Fact: No US President has ever been re-elected with an unemployment rate above 8%.