By now this is old news; the US created only 74,000 jobs in Dec. This was the biggest miss of expectations since 2009 and the biggest monthly drop since 2010. This of course would never have happened if it were not for the “bad weather.” The sad thing is, we are now 5 years out from the onset of the credit contraction and we are still being fed the exact same line…”recovery.” Zerohedge did a great piece on Friday depicting unemployment leveling off at a very high level and not recovering as we have been told. All I can say is that if this is “recovery” I can’t imagine what “recession” will feel like.
When I was in school for business we were taught that “recovery” normally lasts from 6 months to a year after a recession, the economy then grows for 3 years or so and then begins to slow into a recession…and the cycle starts all over again. The funny thing is that “this” was pretty much true to that point in time (I graduated college in 1982). But then things began to change. We didn’t get a recession in 1986 like the cycle calendar would have predicted. We had a mild (aborted) recession in 1990-91. 1996 was nothing. 2000-2001 we had the tech market blow up and it really looked like a big recession was finally in the cards but…911 happened and the war machine ramped up production. We finally turned down and almost lost the system in late 2008 but we were “saved” by zero percent interest rates and the almost doubling of Federal debt. Ever since 1982 (really ‘86 when the tax law changed) we have reflated and avoided paying the piper…who has yet to be paid I might add. This is all history and well known.
The ways that “numbers are calculated” have changed drastically since I left college. Both inflation and unemployment calculations have changed drastically. Focusing on unemployment, look at what has happened. Employment “growth” has become laughable. The “calculators” add over 1 million jobs per year out of thin air saying that, “They can’t really define these jobs but they know that they are there.” Now, once people drop off the unemployment rolls they are assumed to no longer want a job…so they are no longer part of the workforce. The “participation” rate is now back to the 1978 levels (you remember…when many moms were not working because they didn’t have to?). The unemployment “rate” fell to 6.7% from 7% last month even though the economy only generated 74,000 (supposedly) and now nearly 92 million Americans are not in the workforce. Were these numbers crunched the way they were back in 1978, John Williams says that the rate would be nearly a 20% unemployment report. My point is this, “it is what it is” no matter what you call it. You can call it a recovery, growth, boom, recession or depression but it won’t change what it really is.
“What it really is?”? Americans largely are now under employed. There are many that would like a job and don’t have one. There are many who would like a better job. There are also many who collect subsidies and don’t want a job, their job is their subsidies. But, the problem is this; we have taken on more and MORE debt and expanded fixed and guaranteed subsidies at the same time. The “ability to pay” is no longer there. You can mask the problems and or mislabel them but it will not change the reality. The reality being that we can no longer afford to live as we have for so many years.
We have “outlived” Greenspan’s thought process where only sentiment, common thought, perceptions and emotions are important and able to “fix things.” We have arrived at a point where the real numbers count. We have arrived at a point where it doesn’t matter how brainwashed the participants are, the reality is what counts. Think of this as a 747 in a nosedive and captain instructs the stewardesses to serve food (like in the old days) believing this will keep the passengers calm. Will serving food and making the statement “all is well” or painting a level horizon on the windows prevent the crash? No, only the captain can do this by changing whatever it was he was doing to create the nosedive and even then it may be too late as the motion is already well into progress. This is where we are today. We are crashing and at the same time taking on more weight with higher debt levels and higher spending. Call it anything you’d like and you can ignore the reality; it will not change the outcome.