By John Galt
February 7, 2011
The “experts” sprung into action last Friday with the release of the hilarious piece of monthly fiction known as the Bureau of Labor Statistics’ Employment Situation Summary. The banter was to blame the weather, the lazy workers who didn’t try to find a job, and of course the recovery for the abysmal showing but the reality when one looks at it was stated best by of course, Rick Santell at CNBC:
Needless to say Zandi (from the video above) must be shopping for a position at the Fed or within the Obamanation because there isn’t enough grape Kool-Aid or cocaine in the world to make any respectable economist utter the nonsense he spewed last Friday. Unfortunately for the administration and those proclaiming that a Wall Street recovery equates to a Main Street recovery, the numbers are far more bleak. To offer some perspective, there are areas within the employment matrix that have hit new lows which have been unseen since World War II and continuing to indicate further declines are possible. Let’s review the bleak numbers local newspapers avoid, politicians ignore, and the average middle class American is quite well aware of as the standard of living in this nation continues to decline.
The participation rate is at a level unseen in almost 30 years and that should disturb anyone with even a basic comprehension of the U.S. economy. These levels equal the rate from 1983, which is vividly displayed in this chart from the Federal Reserve Economic Data (FRED) reports from the St. Louis Federal Reserve:
There is little evidence in the last two years of an uptick in the data within this report so that begs the question; what happens to the millions of poor souls who have given up, can not start their own business, and their benefits run out? They are no longer counted and thus ignored by Bubblemedia and economists yet they still exist in our society, suffering in silence while wanting to work but unable to find anything. Part of the dilemma can be tracked to the housing fiasco which is still unwinding and setting up for another major price drop in 2011 along with record foreclosures across the land. If a prospective job applicant can find a job in another city the choice might be to abandon the home they own in that particular state, travel across county then face the wrath of legal actions and IRS tax consequences which would follow. The other choice is to remain unemployed, stay in the city they live in and then pray for more government assistance to keep them in their home, even if they are living there without using utilities and subsisting on handouts from local churches and Federal programs.
The key thing to remember is that as the participation rate has dropped, so has the home ownership rate and in this author’s opinion, there is a direct relationship between the decline in civilian participation, foreclosures, and the decline in home ownership. I have charted this relationship on the following graph from FRED:
Note the lag in the home ownership rate (blue line) that is declining and which is now following the civilian labor participation rate down at a much sharper rate. In the end the home ownership rate will probably return to a more reasonable 55-60% level which means that there will be further declines in both metrics displayed above.
The savior of this economy is manufacturing, or that’s what the Bubblemedia and financial “experts” would have you believe. It would be hilarious if it were not such a pathetic joke as this graph displays below:
The charts do not lie, nor does the data. manufacturing employment levels for all goods produced is now at levels unseen since 1950. Disturbing? It should be. This is primarily due to two factors, the latter being the most important:
1. Modernization. It is perfectly logical to assume that automation would expedite the manufacturing process and reduce the number of workers necessary. This sharp of a decline however, has a more ominous reasoning behind it.
2. Outsourcing. So what do you know, the little feller with the big ears from Texas may have been more than correct about NAFTA and the outsourcing of America’s manufacturing base overseas. The jobs that have departed from the manufacturing sector to overseas destinations around the world will never return unless America engages in a strategic revision of all of the policies regarding trade and domestic economic structure and quickly. As it sits now, the globalization movement still holds the upper hand with complete control of the two major political parties inside the U.S.
To be fair, I can break that chart down further with more data from FRED, so I shall begin by displaying the durable versus non-durable goods in two separate graphs which will not be a shocker to my listeners or those that have been following these pages for years. First durable goods manufacturing employment:
The non-durable goods manufacturing sector reflects an even worse data point as it it now has employment levels unseen since measurements commenced in 1939:
Thus when you hear the “happy happy” news of auto workers being recalled, be skeptical. All it means is that we’ve recovered from 1950 manufacturing employment levels back up to maybe 1952 era numbers. That should disturb everyone as there are no plans to repatriate our manufacturing capacity back to the states nor employ more citizens to put the stamp “Made in America” back into vogue.
III. FINANCIAL SERVICES, RETAIL TRADE, TRANSPORTATION, AND UTILITIES
I know what happened. If we are to believe the “experts” then we must accept the idea that everyone became a bank teller, stock broker, Realtor, or truck driver, right?
Not so much.
In fact the Financial Activities metric reflects a return to just before the .com bubble expanded then burst, so obviously with the ongoing declines, this is not where all of the new “jobs” are being created or saved.
Maybe we’re seeing a massive rebound in the retail trade:
Well, I guess we’ve added enough retail jobs to equal 199 levels of employment. Unfortunately the calender says that it is 2011 so obviously the retail sector is not employing nearly enough people to offset years of economic deterioration.
Trade, Transportation, and Utilities must be where the jobs are:
Uh, yes, umm, that’s it. Happy New Year! It’s 1997 and we’re feeling fine. Can’t blame all of that on outsourcing but if that’s the best we can do after a massive recession, I would hate to see what this number looks like a year from now. I thought we were “exporting” our way out of the recession and restarting consumer spending? This particular indicator does not seem to verify that fact either. I guess solar panels don’t generate many jobs on a cloudy day or economy either.
That’s it! All the stimulus and Mr. Fix-It bankster home loan programs have reinvigorated the construction industry, right? Let’s look at that old chart of mine from way, way, way, back from last last week:
With the results posted above and the decline in public construction expenditures also in 2010, this graph should not be a surprise:
And there is no indication of recovery this year in the construction industry. The permits issued in Florida have been anemic at best the last few years and without a turnaround and the security needed for people to feel confident to purchase a home, do not look for this to improve any time soon.
IV. WHERE THE JOBS ARE: TEMP HELP AND GOVERNMENT OR NOT
The mantra on Bubblevision 1 (CNBC), Bubblevision 2 (Bloomberg), and Bubblevision 3 (FBN) has been the non-stop series of experts throughout 2010 that the creation of all of the temporary jobs would lead to permanent job creation and this was the first step to a steady economic recovery. The reality? Not so much heading into 2011:
Based on the recent declines in Temporary jobs hiring, we are now surging into the year of 1998. If that’s not disturbing, I don’t know what is. Wait a minute, yes, I do know what is even more disturbing, this chart:
As you can see from the chart above, despite the blip downwards due to layoffs in the state and local government sector and layoffs from the U.S. Census last year, this sucker has been on a consistent bureaucratic rocket ship ride to infinity and beyond. There is no acceptable reason to have over 22 million citizens working for the government at every level unless the plan to create a greater Euro-Socialist utopia is well under way, which does appear to be the case. These jobs do not create nor expand capital and do little if anything to improve profitability or growth in the U.S. economy so by this measure alone it can be determined that the growth here is nothing more than leech upon our society, bleeding it dry faster and faster as they claim that government can save the world and our nation.
No wonder the Bureau of Labor Statistics does not want to discuss these numbers or many others. The headline number is more sexy and as long as the sheeple believe the “real” unemployment rate is 9.0% then they can continue on this highway to hell at 125 mph without any visible objections from the masses. Buckle your seat belt and get ready for the crash landing.