The way the latest unemployment numbers were reported by the mainstream media (MSM), you would think the Great Recession was over and the United States was solidly on the road to recovery. The Associated Press reported the numbers by the Bureau of Labor Statistics (BLS) with a story that said, “The United States added 227,000 jobs in February, the latest display of the breadth and strength of the economic recovery. The country has put together the most impressive three months of job growth since before the Great Recession. The unemployment rate stayed at 8.3 percent. It was the first time in six months it didn’t fall, and that was because a half-million Americans started looking for work.” (Click here for the complete AP story.) I don’t see how the MSM can say this one number is “the latest display of the breadth and strength of the economic recovery.”
Cyclical and structural unemployment are gripping the nation. Certain jobs are gone forever or, at the very least, for a very long time. Maybe that’s why millions of people have given up even looking for work. Forbes.com reported, just a few weeks ago, millions have stopped looking for work, and the government has stopped counting them. The report said, “In the latest, much celebrated, unemployment report, the labor force participation rate had plummeted to 63.7%, the most rapid decline in U.S. history. That means that under President Obama nearly 5 million Americans have fled the workforce in hopeless despair. The trick is that when those 5 million are not counted as in the work force, they are not counted as unemployed either. They may desperately need and want jobs. They may be in poverty, as many undoubtedly are, with America suffering today more people in poverty than in the entire half century the Census Bureau has been counting poverty. But they are not even counted in that 8.3% unemployment rate that Obama and his media cheerleaders were so tirelessly celebrating last week.” (Click here for the complete Forbes.com report.)
While we are on the subject of unemployment and poverty, the number of people on food stamps jumped to more than 46.5 million in December 2011! It is a new all-time record. How can the nation be in a true “recovery” with increasing numbers of Americans on the government dole?
According to economist John Williams of Shadowstats.com, the latest good news about job creation is distorted with what he calls “massive seasonal adjustments.” The latest Shadowstats.com report, last Friday, said, “With heavy warping of the seasonal-adjustment process from the effects of the extreme nature of the current downturn, the resulting employment gain and unemployment rate level remain of questionable quality and significance.” If unemployment were calculated the way BLS did it in 1994 or earlier, the true unemployment rate would top 22% according to Shadowstats.com. Williams also says, “The outlook for the broad economy remains bleak, despite relatively upbeat February payroll data. Bank lending remains impaired, while household income has taken a new hit, as indicated in recent reporting. Separately . . . annual and monthly growth in the broad money supply appears to be stalling, again. That likely is a further indication of mounting difficulties in the systemic-solvency crisis.” (Click here to go to the Shadowstats.com home page.)
“Mounting difficulties in the systemic-solvency crisis” means, in reality, it is more likely financial collapse is coming—not recovery. Maybe that’s why the Federal Reserve recently announced it is going to start another round of money printing because the economy is teetering on an abyss. Marketwatch.com reported just last week, “Federal Reserve officials are considering a new type of quantitative easing that will attempt to boost the economy without accelerating inflation, according to a report published Wednesday.” (Click here for the complete Marketwatch.com story.) If the economy was in a real “recovery,” why would the Fed want to “boost the economy”? The Fed also announced at the end of January it would hold a key interest rate at 0% through 2014. If the “breadth and strength of the economic recovery” was so powerful, wouldn’t the Fed be hiking interest rates? Of course it would. The fact it is keeping them at zero for years and starting a new round of money printing is signaling the economy is in trouble, not in a so-called “recovery.”
Even near record low interest rates are not helping the morbid housing market to recover. According to the latest Case-Shiller report, home prices were down nearly 4% at the end of 2011. What kind of a recovery features near record low interest rates and falling home prices? Also, millions of empty houses are sitting on the books of the banks, and millions more are headed for foreclosure. Shouldn’t home inventory be shrinking in a real “recovery”? It is not, and that’s a fact!
Finally, if there really was a recovery, the government would not be hitting record deficits month after month. The deficit would shrink as the economy got better wouldn’t it? (Think Clinton era.) Instead, the Federal deficit is exploding! The Washington Times reported, just last week, “The federal government recorded its worst monthly deficit in history in February, according to a preliminary report Wednesday from the Congressional Budget Office that said the deficit in fiscal year 2012 is already more than half a trillion dollars. . . . The nonpartisan agency projected the government will run a deficit of $229 billion in February, the highest monthly figure ever.” (Click here for the complete report from the Washington Times.) That means the government spent nearly $8 billion more than it took in each and every day of last month (29 days). This is not a sign of economic “strength” but of tremendous weakness.
You cannot print your way to prosperity, but it can pave the way to an economic collapse.