Jobs Report Isn’t Good News as Most Think
By Torrance Stephens
This past Friday, the August jobs report was released by the U.S. Bureau of Labor Statistics. According to the report, total nonfarm payroll employment rose by 96,000 in August, and the unemployment rate edged down to 8.1 percent. Specific employment increases were in food services and drinking places, in professional and technical services, and in health care.
Almost automatically, proponents of the Obama Administration as well as political pundits touted this as good news and as being proof of the effectiveness of the President’s economic policy. Unfortunately, few if any political talking heads discussed this in reference to the general citizenry of America or offer that the aforementioned may not be the case.
If one actually takes the time to read the report and do some basic math, they would clearly see that for the average American, the data does not provide such a rosy picture. First, is the obvious observation of that 119,000 fewer persons were employed in August compared to the month of July and that Manufacturing employment edged down in August (-15,000).
The reality is that around 89 million people in America are unemployed and the value of the dollar has started to retract if one pays any attention to the Forex markets. Moreover, Gold is up 3.1 percent and silver is up 7.1 percent when the administration and the Federal Reserve are thinking about another phase of quantitative easing (QE3).
Job loss will continue to be a problem for whoever is in the Whitehouse. In particular with the strange policies of the Federal reserve. Bernanke knew in 1988 that quantitative easing was ineffective work because bank lending channel typically close if banks have access to external sources of funding (other people money). Yet, Bernanke and the present administration continue to advocate that in order to revive economic growth and avert deflation, QE is a necessity.
The jobs reports show that QE only makes the rich richer. In fact the Fed has increased its balance sheet from $900 billion to $2.9 trillion the difference is $2 trillion (or 13% of GDP) while the job report shows that 58% of Jobs Created Pay Only $8 hour or less.
Now I know many will say I am just bashing Obama, that I am jealous of the President and that I just don’t know what I’m talking about because the jobs report shows the President is doing a good job. They may even say that the CBO (Congressional Budget Office), as the Presidents often states supports his economic policies. Unfortunately, on the CBO’s track record, I trust them as much as I do a white man with a sheet to have lighter fluid and a match at a BBQ. Let the CBO tell it, from their unrealistic view of this economy, America never goes into a recession.
Currently, the CBO is assuming a deficit of $3.5 trillion from 2012-2021 and if past history is any indication, they are at least likely off by 60% meaning it is really close to $10 trillion. Recall that just ten years ago, the CBO predicted that the US deficit would be at $7.6 trillion currently, but the actual number as of this week is above the $16 trillion mark. Between 2002 and 2010 all of their real GDP projections were between 2.6% and 2.9%. By overestimating growth, you overestimate revenues, which underestimate the deficit and gives politicians the impression they have more of our money to spend before they get into trouble.
Last week at the DNC, Obama suggested that he would cut the deficit but strongly asserted he would use money saved from the wars to reduce the deficit, which is strange since that money doesn’t exist since the war is being paid for by borrowed money mainly from China. All of this seems to be ignored when discussing the economy and the jobs picture, but what can one expect, for only by American math can you have 119,000 Fewer Employed in August than July and unemployment rate go down.
- After disastrous US job report, QE3 expected next week (EndtheLie.com)
- After disastrous US job report, QE3 expected next week (rt.com)
- Jobs report likely to force Bernanke’s hand (economy.money.cnn.com)