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Thread: Are we really in a recovery?

  1. #11
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    I think it's pertinent to touch on the 223,000 jobs number that was recently released and that brought the (U3) unemployment number down to 5.3 from 5.5%, so we can see it in true perspective.

    MSM (WSJ) was unusually gracious enough to give a platform to various economists that let loose with many ugly facts about the true nature of this surface number (though I honestly have no idea what Ian Shepherdson and Gennadiy Goldbergis are smoking). Here are a few takeaways:

    - The 223,000 added jobs fell just short of overall expectations for June.
    - Prior job statistics were downgraded to a sum of 60,000 less jobs created than was reported (thus, no reason not believe this number won't get downgraded even more in the future).
    - Wages continue to be stagnant.
    - The participation rate, once again, declined to new lows we haven't seen since 1977 (which actually explains the 5.3% drop).

    But something more ominous that even these economists didn't clearly stress is that the jobs were part-time jobs, thus is why I put emphasis on the U3 number in the beginning, as the number of full-time jobs actually declined...


    There were no net full time jobs created last month. The number of full time jobs actually declined by at least 162,000 on net last month.

    All of the net new jobs created last month were part time jobs. The Labor Department reported, “The number of persons employed part time for economic reasons…increased by 322,000 to 8.2 million in June. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.” (emphasis added).

    That is why the Labor Department also reported that the U-6 unemployment rate, which includes these involuntary part-time workers, soared from 13.8% in May to 14.3% in June. That soaring unemployment suggests not recovery but renewed recession.

    Hence, the stagnant wages.

    Which then brings us to the next ominous part of this whole charade, or the job-to-population-ratio, which is becoming more unhinged with not only today's full-time job rate still short of 2007 employment peak, but with the population number that has increased higher than it was during 2007...


    ... while the total number of US workers has long since surpassed its previous crisis high, the number of full time US workers has yet to overtake its November 2007 lever of 121.9 million, and in June dropped to 121.1 million.

    Why is this a problem: because while the US still has 800k full-time jobs to go to at least regain the prior peak, during the same time period the US civilian, non-institutional population has risen from 232.9 million to 250.7 million: an increase of 17.724 million!

    Simply put, as US population increases, more full-time jobs need to be available to basically keep society in somewhat of a balance, let alone foster any sort of long-term economic expansion. So, not only have we yet to catch up to the 2007 full-time employment level (which has actually declined), our population has increased by 18 million from that time.

  2. #12
    tWebber stfoskey15's Avatar
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    Quote Originally Posted by whag View Post
    Obsessed with your own opinions much?
    I actually find his opinions somewhat interesting, but I don't know much economics, so it's hard for me to have a real discussion about it.
    I've heard similar claims about how the economic recovery has been weak and not helping the middle class, and it's interesting to read someone else's opinion on it.
    Last edited by stfoskey15; 07-12-2015 at 09:18 PM.
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  3. Amen klaus54, seanD amen'd this post.
  4. #13
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    Another retail sales plunge in June...


    Sales at U.S. retailers unexpectedly dropped in June, curbing optimism about the strength of the rebound in consumer spending during the second quarter.

    Purchases decreased 0.3 percent after a 1 percent advance in May that was smaller than previously reported, Commerce Department figures showed Tuesday in Washington. The median forecast of 82 economists surveyed by Bloomberg called for a 0.3 percent gain. Eight of 13 major retail categories showed declines in demand.

    ...

    “The weakness is pretty broad-based, but it does look like categories that you would consider to be seasonal in nature looked to be very weak,” said Stephen Stanley, chief economist at Stamford, Connecticut-based Amherst Pierpont Securities LLC, who projected June retail sales would be unchanged from the prior month. “It puts a little cold water on the idea that the consumer was gathering momentum.”

    How this will affect second quarter GDP I'm not sure (it certainly can't be anything positive, but I"m still hesitant to take any guesses since BEA seems to be able to pull unexpected tricks out of its hat), but a few other reasons why this data is important:

    - As noted in previous posts, 70% of positive US GDP is predicated on consumer spending (which is actually a facade in and of itself being that consumers aren't spending actual money from their low wage jobs, but spending credit, or illusionary wealth -- see post #5).

    - This once again utterly shatters the economist myth that weather somehow stops consumers from consuming (though some are STILL trying to use weather as a factor), and thus, there is an obvious deeper fundamental problem with our economy.

    - It makes you wonder why this -0.3% drop in sales was unexpected and why "82 economists" surveyed, according to the bloomberg article, expected a +0.3% increase instead in spite of all the data we've been looking at in this thread (participation rate, low wage part time job creation, severe wealth imbalances, etc.).

    In other words, what is the story with these economists and why do they keep missing the mark so badly? Are they looking at the same data? Are they just being overly optimistic, perhaps because the alternative is not an option? Which then makes you question these economists when they claim we're in a recovery and everything is awesome.

  5. #14
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    Surprise, surprise, second quarter GDP rebounded to 2.3%. Although I am truly surprised it was this high, this apparently was a disappointment to economists. I’m not even going to go on any jag here about what on earth made them believe we'd hit +2% growth, let alone 3% since I've covered this ad nauseam.

    Instead, I'd like to focus on first quarter GDP that was actually revised (once again) up from -0.2% to +0.6. So, let's be clear here; first quarter GDP initially came in at 0.2%…

    then it was revised down -0.7…

    then it was revised up to -0.2…

    then revised up again to 0.6.

    So, they managed to finally raise the percentage to +0.6 from a -0.7% decline. Zerohedge points out something interesting about this in that the increase, at least from -0.2 to +0.6, obviously had nothing to do with consumer spending (as expected), but because of an unusual leap in the fixed investment margin…


    So how did Q1 GDP rise by 0.8% in absolute terms if consumer spending, that 70% driver of the US economy, declined?

    Simple: BEA saw fit to boost Q1 CapEx (fixed investment) from a decline of -0.1% to 0.6%. And, the punchline, it used that traditional GDP plug, inventory, even more aggressively, with Change in private inventories rising 0.9% instead of the original 0.5% print.

    Simply put, fixed investment is supposedly the inventory businesses stock up on for the future. Needless to say, not only does this data have the potential to get lost in a sea of all sorts of obscure variables and questionable accounting shenanigans, but this is basically predicated on what businesses expect of future economic outlook.

    In other words, if businesses think the economy will improve in the future, they spend thusly (of course, what business won't invest in future production even if they think things won't improve much, because that's what a business basically does?). Need I say more?

    My point is that, in spite of the fact we know from previous reports here that April and June consumer spending crashed and manufacturing has been dismal up to the month of May, yet BEA is still able to get a 2.3 second quarter figure, who knows what magic data voodoo they'll use to revise it up or down in the months and even years to come. At this point, GDP has practically become an enigma.

    However, with that said, these are the pertinent facts we can deem from the present news that we know FOR SURE:

    - In spite of the revision voodoo from month to month BEA manages to perform, in seven years, 2.3% GDP number and a mere 2% average between 2012-2014 is apparently the best US economy can get so far, in spite of the fact the Federal Reserve has gone to historically unprecedented levels to revive the economy, pumping trillions into the financial system, inflating a record high market bubble and keeping interest rates low for seven years now, a place even the infamous market manipulator king China dare not tread.


    - Not only is consumer spending in the toilet, but according to a Gallup poll, consumer optimism has been on a downward trend since the beginning of 2015 (this is important because this is in spite of the fact consumers were being told by Obama and the MSM that they were in a recovery and everything was awesome).


    - Wages have sunk to record lows.


    To summarize, so far this year in 2015, aside from how they revise the 2.3 GDP number in the months to come, as we've covered in previous posts, labor force participation rate is at record lows, wages are at record lows, manufacturing and the housing market is showing signs of sputtering, consumer spending is sluggish to put it mildly, personal debt is once again skyrocketing to dangerous levels, and consumer optimism is waning.

    The Federal Reserve has yet to raise interest rates, yet many people believe they will raise rates in September and almost everyone believes they'll raise them sometime by the end of this year. But, again I ask, putting aside the economic chaos currently taking place around the world (collapse of commodities, the never ending political and economic chaos in Greece, looming bankruptcy of Puerto Rico, economic turmoil in South America, Chinese plummeting markets, etc.) which has a profound negative effect on our own economy, if economic signs haven't been present for seven years to justify raising rates, what sort of signs specifically within US economy will be present this year to justify Federal Reserve raising rates other than the falling 5.3 U3 number?

  6. #15
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    Henry Paulson jokes with Robert Rubin, two former Goldman Sachs heads, about plotting ways to make the wealth gap wider. Note that these two served as US Secretary of Treasury...





    The irony is that Paulson was the chief orchestrator of the financial system bailout of 2008. Refer to post #8.
    Last edited by seanD; 09-06-2015 at 07:36 PM.

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    US "recovery" in a visual nutshell:



    You be the judge.
    Last edited by seanD; 09-16-2015 at 09:13 PM.

  8. #17
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    More visuals of the wealth gap:



    Though not as specific as what I outlined in post #6, notice how the gap begins to widen before Clinton and Obama, but that it distinctly spikes during Clinton's and Obama's admin. But I wouldn't put much stock in that, as there's no doubt Romney (who supported the bailout, of course), who's just as much of a wallstreet puppet, would have allowed the Federal Reserve to engage in the same unprecedented actions post 2008. Only reason I pointed it out is the political irony, as "democrats" are typically touted as the least pro-super rich.
    Last edited by seanD; 09-16-2015 at 09:16 PM.

  9. #18
    Must...have...caffeine One Bad Pig's Avatar
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    Quote Originally Posted by seanD View Post
    US "recovery" in a visual nutshell:



    You be the judge.
    These would be more meaningful if they all covered the same time period.
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  10. Amen klaus54, Adrift, stfoskey15 amen'd this post.
  11. #19
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    Quote Originally Posted by One Bad Pig View Post
    These would be more meaningful if they all covered the same time period.
    Depends on what perspective one is looking at it from. From a political perspective, yes. In other words, it's difficult to place the blame on any specific prior president because some of the trajectories cover multiple presidential admins. But I think it's meaningful from a much bigger economic problem with our system, which is what I've tried to convey in this thread and correlates with post #5; that our economy is fake because it's based on a wealth illusion that is really just consumer debt. Federal Reserve, the US central bank, has been fueling this illusion cycle by micromanaging (manipulating) the system with its policies. It's just that the Fed's manipulation has really gotten out of hand in the last several years or so (note that most of the spikes have occurred within the 2008 bust cycle), perhaps because the debt is so massive that the illusion is wearing off and the chickens are coming home to roost.
    Last edited by seanD; 09-16-2015 at 11:48 PM.

  12. #20
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    Quote Originally Posted by seanD View Post
    Depends on what perspective one is looking at it from.
    No matter what perspective, using the same start and end points would allow an accurate comparison of the data.
    From a political perspective, yes. In other words, it's difficult to place the blame on any specific prior president because some of the trajectories cover multiple presidential admins. But I think it's meaningful from a much bigger economic problem with our system, which is what I've tried to convey in this thread and correlates with post #5; that our economy is fake because it's based on a wealth illusion that is really just consumer debt. Federal Reserve, the US central bank, has been fueling this illusion cycle by micromanaging (manipulating) the system with its policies. It's just that the Fed's manipulation has really gotten out of hand in the last several years or so (note that most of the spikes have occurred within the 2008 bust cycle), perhaps because the debt is so massive that the illusion is wearing off and the chickens are coming home to roost.
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