Even Better Than Goldilocks!
We stand before the gates of Elysium. Paradise is in view.
Here are some recent headlines:
“U.S. Labor Market Sizzles With Blowout Job Growth, Solid Wage Gains”…
“Another Shockingly Good Jobs Report Shows America’s Economy Is Booming”…
“The U.S. Didn’t Just Avoid a Recession — It’s Adding Hundreds of Thousands of New Jobs”…
“The U.S. Economy Isn’t ‘Goldilocks,’ It’s Even Better.”
The list runs and runs. All are in unity — the United States economy is hale… and the United States economy is hearty.
Not so Fast
Your editor is cursed with a distrustful nature.
It is, in certain regards, excessive — perhaps even harmful.
Who else inspects his own mother’s cooking for cyanide lacing?
This profound distrust is a bias of course. Yet hard experience with government statistics fortifies and validates it.
And so we distrust the latest economic data.
The numbers are not necessarily lies. They are worse than lies — they are partial truths.
And the greatest lies harbor truthful kernels. The propagandist knows it well. And he makes high use of it.
This car has under 10,000 miles on it, says the salesman of pre-owned automobiles.
He does not inform you it acquired them in a pothole-cratered hell.
We are told the United States economy heaped on 353,000 January jobs. Let us assume for the moment it is true.
Where did the lion’s take of these jobs originate?
Economist Michael “Mish” Shedlock:
President Biden is bragging about job growth in 2023. But he doesn’t say where those jobs are. A surge in immigration led to a surge in need for government and social assistance jobs at taxpayer expense. City and local governments are under financial strain…
Of the 353,000 jobs created in January, 136,000 were government, social assistance or health. Over half the job growth in 2023 was government, social assistance and health care. Cities are struggling to keep up with migrants and the costs are soaring out of sight.
Under Bidenomics policy, we have created hundreds of thousands of jobs that are of net negative benefit to U.S. taxpayers.
Is this the sketch of economic vigor? We do not believe it is.
What is more, the total United States employment level declined by 31,000 last month.
How do you like it?
Here are some additional headlines of recent vintage:
“Despite a Strong Job Market, Many Workers Are Being Laid Off”…
“US Job Cuts More Than Double in January”…
“Why Did Layoffs Double in January?”
Meantime, full-time employment presently wallows at its lowest rate since October 2020.
Some 22% of employment growth since December 2022 springs from part-time employment.
Is it because inflation-battered Americans have been driven into additional, part-time employment?
We hazard it is — in part at least.
Yet Labor Department’s drummers can claim unemployment runs at a full-employment 3.7%.
We might remind them that a slave economy is a full-employment economy.
Can you conceive of an unemployed slave?
Should it interest you… once you account for those hopeless unemployed who have abandoned the search… argues ShadowStats… the true unemployment rate runs to 24%.
Meantime, the bulking majority of fresh jobs command limited compensation.
These are stabled within the fields of health and social services, leisure and hospitality and government.
And as former colleague David Stockman notes:
These sectors are on the low end of the value-added chain and therefore the bottom of the pay scale — at least with respect to the two private-sector industries. For instance, the annualized weekly rate of pay for leisure and hospitality jobs was just $28,500 and for education, health and social services it was $57,200.
That compares to an average of $61,000 for the nonfarm private economy overall, $72,100 for goods-producing industries and $109,600 for the utility sector.
Here Mr. Stockman takes the overall view:
If we go back to January 1973, and index the jobs in these low-pay or low-productivity sectors with the two high-pay sectors and the average for the economy as a whole, there is little left to the imagination.
The fact is the BLS count of payroll jobs in the goods-producing sectors — manufacturing, construction, energy and mining — is down at -6% from a half-century ago, while jobs in the utility sector are still -1% below their January 1973 level.
By contrast, the count of government jobs is up by +65% and leisure and hospitality employment is +217% higher. Even more significantly, the putative “private” sector component of the labor market which is overwhelmingly fueled by government tax credits and transfer payments — private education, health care and social services — saw employment rise by +414%.
A Tale of Two Work Forces
“Wages for the top 1% skyrocketed 160% since 1979,” the left-slanting Economic Policy Institute reports.
The same Economic Policy Institute informs us that:
Wages for the tiptop 0.1% jumped a dizzying 345% across the same space — 345%!
What of those beneath them… who hew much of the nation’s wood… and draw most of its water?
Their wages increased a mere 26% since 1979.
That is, the vast majority of America’s wage collectors have guttered along. Its top earners have shown them their dust.
’Twas not always thus…
The Plodders vs. the Speeders
From 1917–1940 the bottom 90% were neck and neck with the top 1%. Both groups gained at nearly equal rates.
But in 1940, the plodders began to overtake the speeders.
These long shots pulled away over the next three decades… by lengths and lengths… and furlongs by the early 1970s.
The 1% could not keep pace with the 90%. But the race was not over…
In the early 1980s, the fleeter horses made their move, their dramatic move.
The top 1% ran down the exhausted 90% by the early 2000s. They have since extended their lead, the plodders fading.
Don’t Look Beneath the Hood
Certain rascals have labeled this economy a “fake” economy. We believe there is justice in this estimation.
Yet let us transition from an equestrian theme to an automotive theme…
We have likened this economy’s appearance to an exotic racing auto. It is sleek. It is finely lined. It is waxed to a blinding sheen.
Yet lift its hood. What do you find? You will find a lemon lurking beneath this racer’s glittering exterior.
The transmission slips gears. Cracks run through the pistons. Rust corrupts the engine block. Oil oozes from every seam.
And the quack mechanics overseeing its maintenance — the Federal Reserve — cannot distinguish a radiator from an alternator, an inverter from a converter, a battery from a brake.
They are, in a very real sense, anti-mechanics. They have made a wreck of the thing.
Who will ever execute the repairs?