America Gets More Empty Reports

by Mike McCune —


American market indexes reached all-time highs on April’s unemployment and jobs report today. The markets ignore corresponding reports showing service sector jobs are in retreat and factory orders showed the sharpest decline in seven months.(1)


How can the facts be reconciled?


The short answer is they can’t.


The markets continue to rise only because people cling to the shreds of good news and ignore reality check data which isn’t so rosy while the Fed continues to pump out money at a record pace. Reality will sooner or later have to take its bite.


Even the rosy jobs report has a negative aspect. Once again, the vast majority of “jobs” are in the part-time arena. How do we know this, you ask? Because the percent of Americans in the workforce held steady. If these were “new” full-time jobs the workforce participation rate would be climbing.


It is another sleight of hand accounting manuever by the Bureau of Labor Statistics in which a job is a job is a job no matter how few hours the person is going to be employed each week or what the pay scale is.


Because the Patient Afforable Health Care Act is looming and employers will be required to pay for 2014 what they do this year, the employers are trimming full-time staff to make part-time positions. The part-timers (below 30 hours a week) don’t count against the 50-employee minimum cap so the employer is avoiding penalty provisions. Thus, by BLS counting, the employer actually has two jobs where he had just one before even though the total number of worked hours or production hasn’t changed.


Again, how do we know? Because the country’s output, as measured by factory orders and service sector jobs, is declining.


March factory orders, which are the latest available, showed a 4% drop, the biggest in seven months. This stunner was offset quickly by the analysis showing planned business spending rose slightly. Which overall would be a wash for the economy if one casually disregards the government-induced inflation caused by the printing of more valueless dollars each month.


Economists are accomplished magicians because they routinely measure the unmeasurable. Paul Krugman, the Progressives’ most ardent economist supporter, summed up the fiat U.S. dollar position concisely without meaning to when he wrote in 2011, “What we want from the monetary system isn’t to make people holding money rich; we want it to facilitate transactions and make the economy as a whole rich.”


This statement supports the 99% versus the 1% of Occupy Wall Street movement precisely without saying anything worthwhile.


For instance, it doesn’t define “rich”. Krugman used it two different ways in the same writing. First he meant “the 1%” while the second time he meant “healthy.” It has to be one or the other when used together except in his mind.


The missed point in all the data is the inflation rate. Inflation is an inherent trait of fiat money because it lacks a base. Krugman abhors the base–like gold–because it is susceptible to deflation much more so than inflation. If dollars were limited by the existing, government- or bank-held equivalent in gold, economists would not be able to report any “gains” in our country’s economic activity without real gain being there.


Since reporting “gains” is critical to both the government’s and its quasi-government Federal Reserve’s policies, measuring a devalued dollar against a previously stronger dollar gives the illusion of “progress” Progressives desperately need to support further errant policies.


So the markets, who like government flacks need to tout their soaring market price–not value but price, pull out the good nugget of news, ignoring the faulty logic that allows such a hollow nugget to exist at all.


So yes, jobs are being created–if you do not need to live independently or support a family on that job. The unemployment rate is dropping even though workforce participation has not improved from the 34-year low level of 63.3 percent.


But while the media and Wall Street cheer, where are the profits from true growth and not borrowing from the artificially loose money policies of the government? Where is the core analysis from mainstream news outlets that will finally put the picture into full focus for all to see?


In a nutshell: Nero (Obama) continues to fiddle while Rome (Main Street USA) burns. It is that simple and that awful.


“I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man.”–Thomas Jefferson


(1)–Data for today’s Rant came from Reuters, 5-3-2013, “Jobs Data Not Enough to Offset Weak Growth”, Moneynews, 5-3-2013, “Factory Orders Tumble 4%”. Paul Krugman’s quote was obtained from New York Times editorial written 8-16-2011.  

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