By Mike McCune –
Whoever is eyeballing the economy better get rid of the old standby baloney from college testbooks. Something is rotting but the economists can’t find it.
However, one thing is conclusive: the economic numbers for December do not compute. Which casts a very dark cloud on the future.
The first fact to input is the government’s rosy analysis the Christmas shopping season was 2.7% stronger than 2012′s shopping period. This is compared to one private estimate from last week that the Christmas period was much more Scrooge-like with a free-fall of 11% from 2012 sales.
The private estimate also noted that the number of bodies entering retail outlets was down 21% from 2012 levels while the government’s measurement came in at merely a 14% decline. This arena is step one in looking at the respective stances taken in the previous paragraph.
The next fact is also a puzzle when compared to the first two facts. The amount of purchases by each buying entity going into the stores was down by almost 11%. This fact is agreed to by both the private and government sources.
Let me see…if I have 14% fewer shoppers that leaves the retailers with 86% of what they had in 2012 if everyone spent the same amount. But they didn’t, those individuals spent only 89% of what they did in 2012. That leaves the average retailer with 76.54% of what he had from 2012.
But the in-store shopping is only one aspect, you have to toss in the on-line sales. On-line sales this year increased by 25%. On-line sales in 2012 accounted for 3.62% of all sales during the Christmas season in 2012. Add in the 25% upswing and you are left with 4.53%. This is not a raw number of the whole but treat it as such and toss it into the Christmas mix with store sales and you get at best 81.07% of 2012 sales. That leaves you just barely under a 19% loss so how could the government possibly have projected a 2.7% increase?
This is a muddle, so let’s look at the jobs reports for December. Those ought to have some input in making an economic determination. The number of new workers reported in November kept getting revised upward and was up over 35,000 at last estimate over official numbers the first week of December. December was going to be the New Year’s Eve corkscrew for a wild 2014 ride was the conclusion.
The economists on Wednesday had their expectations compiled by ADP. The consensus was the December jobs report would show 238,000 more non-farm jobs! That number was almost 10% more than what the economists over at the bond desk were anticipating and a whopping 33% higher than the official government report which was compiled by Goldman Sachs and anticipated a December report showing 175,000 gained jobs in December.
Hey! December’s economic number was going to be a real burner and reaffirm that the government stimulus program was on the right track and working smoothly with the Federal Reserve printing press run. The final December tally was going to crush the loyal Opposition to the Exalted Kenyan’s strategy emanating from 1600 Pennsylvania Avenue, Washington D.C.
How good was it going to be? Mark Zandi, chief economist at Moody’s (Yes, yes, yes, the same Moody’s that was contemplating downgrading the U.S. financial status yet again only seven weeks ago) reviewed the ADP report and commented “The job market ended 2013 on a high note.”
Zandi should start mucking out stalls. He’s no better at reading reports than he is at analyzing data so maybe he’d be better sifting something more to his level of understanding. He’s drunk the Kool-Aid. The first December numbers were released by the Bureau of Labor Statistics just hours ago. December was awful.
Non-farm payrolls did not rise the 238,000 projected by ADP. They didn’t rise 215,000 expected by the bond traders. They didn’t rise the 175,000 projected by Goldman Sachs. The non-farm report came in at a mere 74,000. That’s less than a third of the actual consensus of ADP and the smallest number since January 2011.
Government analysts were quick to point at the numbing cold for skewing the anticipated numbers. They pointed to their sales numbers, the strong industrial production and gains in the trades to show the economy had reached solid footing and was ready for a big lunge higher.
But the number of worked man-hours fell in December. The unemployment rate took a huge .3% drop because the idle got more discouraged, not because of they were hired.
The capper was the wage report. Wages rose at the slowest level since….wait for it…January 2011. But what was even worse was employment in education, health services, construction and factories also fell while transportation and warehouse payrolls decreased. This made for the weakest economic report since September 2010. September 2010 was just 15 months into the Obama Administration’s technical recovery period.
Give the December weather as an excuse. It was a deep cold that hasn’t been seen for more than two decades in much of the country. But that is only part of the problem and is no excuse for the government to deliberately falsify projections trying to prop up untenable political agendas–as it had to do to get a 2.7% increase in December sales–after the deep cold had had a grip for a week.
But the final nail is hammered home by an long-disregarded economic number. During the Great Depression, simply because of population growth, the economy rose 2% a year during the worst economic tailspin witnessed in this country. Many sectors of the economy are just now getting back to 2007 levels–despite a two and a half million per year increase in the population. That means America’s current economic level is 14% below what it should be even before inflation from the printing press and monetization of our own debt is figured.
Any way it is sliced, the economic picture is bleak. Any way the government mouthpieces try to spin it, the economic picture is bleak.
Don’t take my word for it, just look at the depression numbers. Those tell a story that won’t go away and beg a straightforward explanation by the government.
“I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man.”–Thomas Jefferson