Shenandoah

by John Galt

December 6, 2009

The celebrations, fireworks and head fake by the markets on Friday illustrate the celebrations of our usual monthly data dump from the BLS but those numbers, insane as they appear to be from the ground, created the “hope and change” long promised by the current administration when in reality it has nothing to do with government policy but more so the impact of a cyclical recession running out of gas as some businesses attempt to profit during this seasonal peak. You heard the blubbering from the “you better buy stocks now” economists who’s agenda is set not by independent analysis but by the direction their firms demand so they can move the dead fish off their decks and into your accounts. One of my favorite and oft repeated themes was the “increase in temporary hiring the last three months” which was heard over and over and over again but never put into context by these clowns as they only study statistical rather than fundamental reasons for the rebound in this area. There are two considerations when you hear this and number one is obvious: It’s Christmas you idiots, of course temporary help is hired.

Then of course there is the harsh reality some of us witness at ground level the Bubbleconomists deny and do not even attempt to understand what Middle and Lower class Americans are enduring right now. People are desperate. People are freaking out. The moral dilemmas facing the average American oft ignored by these Ivory tower elitists and their huckster friends on the networks are ignored and not considered within the greater scheme of things. There is a harsh reality setting into the mindset of Americans nationwide and that is the fact that things are only getting better for those within 100 miles of D.C. or tied to certain groups now entitled to permanent government benefits and employment preferences.  The other reality with regards to the large “hurrah” about the temp numbers is a failure to understand that many companies, primarily in the small and mid-size business categories (Less than 300 employees; just an estimate on my part) have and are continuing to reduce pay anywhere from 10-30% per week and/or reduce hours which believe it or not is reflected in the average hours statistics but nor discussed as an important issue by the Bubbleconomists.

First, let us look at continuing claims (Not Seasonally Adjusted) and get some idea of the severity of the downturn we are still engaged in.

I guess one could call this “good” news as the Bubblevisionistas would call it as we are now back to the 1976 and 1981 recession levels. Of course the fact that our population was considerably smaller at those points in time escape the pumperdumpers so we’ll call this news “better” but in reality the people losing their benefits are in for the seriously hard times that their grandparents who endured the Great Depression of the 1930′s had to deal with except this time the concepts of “forced bankruptcy” and the fact that the “new” bankruptcy laws do happen to favor the very banksters their taxpayer dollars were used to support and ensure that their losses were socialized. Despite the rah-rah of our President and the talking heads on television, there is an underclass of our citizens now entering and becoming the main stream with a very bitter attitude towards the very institutions they once idolized a decade ago.

While that number looks like an improvement, take it in context of the level it is at over the number of years, then look at this chart from CLUSTERSTOCK.com and their Chart-of-the-Day from Friday December 4th:

That’s right boys and girls. As more and more qualified citizens (key word there) drop out of the work force and as more and more citizens (once again, a key word there) who are qualified to work but elect to accept the welfare bonanza or are forced out of their profession due to other circumstances (Translation: Construction, illegals, 1+1, etc…) this number has exploded to a saddening and maddening point of no return since the manufacturing base has been eviscerated.  If you do not believe me, here are some more graphs to reflect the Civilian Participation rate. The first chart is a 20 year figure to demonstrate the dive:

That percentage might look horrid but when you see the raw numbers, not seasonally adjusted from the BLS, those percentages start to make sense:

Basically in this “Lost Decade” we have been pretty much flat at the end of the period and no real increase in the number of civilians participating despite normal population growth. To get some idea of just how drastic this change is, you have to refer to a 25 year chart to understand the drop in the percentage of participants:

From this graph, without putting my usual assortments of comments and lines, rocket science is not a requirement to deduce that the percentage of participants in the work force has zoomed all the way back up to 1987 levels. How’s that Hopey-Changey thing working out again?

But I digress.

While the Average Hourly earnings are up as inflation when properly interpreted reflects:

the BLS charts also reflect that the Average Hours worked remains mired in a better than decade long low and no massive improvements are in sight once the Christmas retail season ends:

Both of those graphs are not seasonally adjusted so the drops and distortions you see are what is happening in reality, not in the world of statistics. Thus one can conclude that fewer people are working fewer hours but being paid more per hour to do it. Until you start breaking down the industries impacted. Unfortunately when one goes to a long term historical charts, this is not your Mom and Dad’s America any longer:

I guess if we are happy to see a 30% drop in the average hours worked in a 45 year period, we should all be Happy-Happy Joy-Joy and shut our mouths and be glad that with 20-30% less pay than we had before, we get 30% fewer hours than before to go with but we’re still “full time” employees according to the BLS and Political types. Gang, this is the reality and I don’t care how the clowns on CNBC, FBN or Bloomberg spin it, small business in America is dying or being murdered by a bunch of regulatory hyper enforcing bunch of buffoons, just as it was warned to be in the book Atlas Shrugs.

Nondurable Manufacturing is still at Pre-World War II levels:

Construction jobs? Yeah, right, don’t believe the NAR/BLS/Obamabs hype:

I had to use a 20 year chart for perspective and as you can see, we are now at levels well beyond the boom years and back towards the numbers from the late 1990′s. Hardly a ringing endorsement that we are going to see this “massive” recovery any time soon. Without construction, especially new home and commercial construction, this economy is not recovering any time soon.

Even the proponents and participants in Bubblevisionland are impacted by this as since the only financing that appears to be happening is that which the U.S. Government buys or guarantees and the Financial Service industry is back to pre-Dot.com crash levels:

For those that long for the “Happy Days” of Fonzi and cool American made cars, well, the “Goods Producing” category tells the tale:

“I like Ike” is all that chart screams.

If you think Ike was popular back in the day, well, Truman was to a point until he started to try to shove more idiocy down the throats of American business. And come to think of the parallels with this administration and the Bushies, this chart should make you reflect as here is a 50 year chart to reflect the level of Durable Goods Manufacturing  employment, something we have not seen since Truman was running the circus in D.C.:

And one more time, manufacturing will lead us out of the recession via exports making what again? 49 Chevies?

That’s right, modern technology will lead us out of this recession?

Of course  I meant it would lead India out of their slump, not the United States. When you see that chart you realize just how severe this problem is as the areas with increases in employment are sadly the “service” industries, medical/education (mostly Government related), and of course Government at every level:

While this might give one pause to wonder just how our deficit laden government can hire anyone else, keep in mind that the Census employees will be hired and immediately distort the January through May statistics to reflect a huge spike in employment even though it is temporary. IF anyone with more than one brain cell turns off the Bubbleconomists like Steve LIESman and starts to reflect on the real data, PRIVATE business and corporations are not indicating any massive hiring spree for permanent jobs and the hours are not recovering at a pace consistent with any recovery in the past 30 years. We will see nothing more than the proverbial “jobless” recovery in the next five to six months and that should be alarming to anyone considering our economy recovered, recovering or getting healthier any time soon. The only thing recovering right now are those involved in the upholstery business and that’s about it.

As usual, I have my own monthly charts and since my favorite charts are the reality vs. the perception, let’s start with Table A-12, Section U-6 chart which I like to call the “real” unemployment rate (Although Shadowstasts.com does a better job of incorporating the unemployed contractors trying to find work):

Despite the seasonal adjustments, still an ugly chart. When compared with the Non-Seasonally adjusted chart it is not providing much hope:

Thus my prognostication for the future is to not “get your hopes up” for any sustained recovery for the private sector.

The Birth/Death Harry Potter calculations are also out and what do we see? A normal seasonal minimum but still quite some fiction being estimated in those numbers:

The most amazing thing to me in the entire report is that some way, some how, Obama forgot to have his staff add construction jobs!

Maybe they just copied last years report to save time. When you see the differential when you subtract the fiction of Birth/Death from the totals, you see we still are losing jobs, we still are not adding jobs and thus validating the Private Sector theory of “we’re too terrified of what is next to hire anyone” theory of of our current economic situation:

The revision circus continues building up optimism that all is well and the 10% who are unemployed should quit their bitching. Of course you know I feel otherwise but explaining to a politician that numbers and statistics are often manipulated to make them look and feel good is hard to get through their skulls unless it is attached to a check with six figures on it.

Well, there appears to be some consistency that those who don’t count, won’t be counted and the lack of participation doesn’t mean squat to those in charge. Lastly the differential in the revisions continues building up momentum for the big January reset when the BLS does its annual “oops my bad” on their piece of monthly fiction and resets their calculations:

Thank goodness the Obama team had training from the Bush and Clinton teams on how to move the numbers. The reality we are witnessing gang is that despite the feel good crappola being spoon fed to the masses to get them shopping, the pain we have felt is not over. Banks are not lending, businesses are still failing, and lastly the housing situation is about to become somewhat more severe along with the commercial real estate situation. Get ready for a wild 2010 gang and perhaps, just perhaps, if we get lucky we will not kill our dollar along the way.

I doubt it though.