For a good two weeks now, the American business media have been talking up the US ‘recovery’ bigtime. I posted on this recently, using data from Zero Hedge contributors and others which, when pulled together, painted a very different picture of the USA going into 2012.
There are a number of reasons why this bollocks is being spewed out. A purely political one is that it’s an election year, and Obama needs to be sure he’s going to get re-elected. Those very clearly on his side (the New York Times, Huffington Post and Reuters) are thus laying the ‘recovery data’ on with a trowel at the moment.
Yesterday we had the latest round of US Labor statistics to get excited about.
‘Unemployment near to 3-year low’ trumpets the main business page Reuters headline this morning GMT. But all things are relative: the rate is still 8.5% of all working age Americans. 1 in 12. In pure numbers, that’s 13.1 million. Go the the official Labor Statistics website, and you’ll read this:
‘The jobless rates for adult women (7.9 percent), teenagers (23.1 percent), whites (7.5 percent), blacks (15.8 percent), and Hispanics (11.0 percent) showed little change…..The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 5.6 million and accounted for 42.5 percent of the unemployed.’
What we’re looking at here is a powder-keg short of the right fuse: 2 in 5 US workers are LTUs, 1 in 4 kids is unemployed, 1 in 6 blacks….and using Washington’s key definition of ‘real participation in the economy’ we read that ‘The civilian labor force participation rate (64.0 percent) and the employment- population ratio (58.5 percent) were both unchanged over the month’.
‘US economy gains steam as 200,000 jobs are added’ headlined the New York Times business page today. But in tiny, light-blue print underneath, an associated story reads ‘Market Response Tepid To U.S. Labor Report’. I’m beginning to understand why: what are the folks in those 200,000 jobs doing exactly?
This is where it gets really interesting. We just had Thanksgiving and Christmas, right? The US Mail for one usually takes on temporary workers during December. So do most communities. So despite the fact that there are now (allegedly) 280,000 fewer people working in government than there were at the start of 2011, the numbers would briefly surge in December.
‘The retail trade continued to add jobs in December, with a gain of 28,000….Employment in transportation and warehousing rose sharply in December (+50,000)….’
Now compare the scale of these gains to those in truly (potentially) currency-export earning jobs: mining, 7000, machinery 5000, fabricated metals, 6,000. Hardly a one even gets into five figures.
The picture that emerges is one of seasonal gains in employment, and very little more. But there is also an undercurrent of fiddling too. Not mentioned in the headline figures, for example, is a whopping group (2.5 million) described as ‘marginally attached to the economy’. Actually, they too are unemployed folks, but kind of off-balance sheet to use the common spin vernacular. They are defined thus: (my italics)
‘2.5 million persons were marginally attached to the labor force in December, little different from a year earlier. These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.’
Isn’t that a Swiftian lulu? ‘Sorry kid, you’re not unemployed, you’re just not looking hard enough’.
Like I said, there’s an election to be won. But at a far more important level, there is also a philosophical argument to be won, and it goes like this: ‘See – behold! As we predicted, the system isn’t broken…it has healed itself! We are saved!…..or rather, we would be if it wasn’t for those pesky Yerpeens f**kin’ up as usual.’
This has been the Geithner/Bernanke/Fed line for at least three months now: ‘none of this is America’s fault…it’s carelessly regulated London and dumb-assed Commie Brussels that are getting in our way. If they’d just get their acts together, we’d be flying right now’
This too is 100% cast-iron government-tested bollocks. The 2008 credit crunch began in the US and infected others – not the other way round. A significant minority of the money carelessly lent to ClubMeds came from the American banking system. And America’s rising national debt and deficit over many years is a reflection of one simple reality: more consumer money (being spent on credit) buying imported goods as part of ‘retail therapy’ – and a steadily declining export performance. Neither the EU nor London had anything to do with that….. other than being equally useless while the Brics stole the show.
As I posted two years ago, “The last thing America needs right now is an economic recovery”, and that’s as true as ever today. Burgeoning growth in domestic retail and service business will simply drive up personal indebtedness and raise the import bill. Even when the State was booming between 2002 and 2006, the deficit problem remained exactly the same.
The USA has had a temporary seasonal boost to briefly disguise a long-term economic decline. It can reverse that decline, but in the meantime Washington needs to get real and understand that what Americans call ‘the middle class’ – and we call the c1c2 skilled workforce – has seen its earnings and wealth steadily decline, while those working at the very top of services have seen theirs spiral upwards in an obscene castigation of that craziest of Reaganomic ideas, ‘trickle-down wealth’. Most of these are, yes – you guessed it – investment bankers. Those MoUs who created a virtual, ‘notional’ money madhouse called derivatives, currently running at thirty times the total global gdp. When this – and money unwisely lent to latin Europe – come home to roost, America will find itself in deeper mire than any other world economy.
When that happens, Washington is going to need a lot of plausible excuses – and by far the easiest of these to employ is a campaign of blamestorming aimed at foreigners. Without those bogey-men for the People to grind their teeth about, the US Establishment would be facing something far more ugly….and it may do so anyway, if enough Americans wake up to the fact that they’ve been had, stung, turned over and tossed aside by a tiny and unbelievable greedy minority.
So one way or another, there’s a lot at stake. Let’s see what the January figures bring. But let’s also bear in mind one key thing over the next 2-3 years: this game is going to get very dirty indeed.