The Slog mines the data, and finds evidence of a carefully manipulated myth.

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.

What else do people do at Christmas? Well, they buy stuff in shops, and they send the presents. Drill down to the next level at the Labor website, and you find this:

‘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.


  1. “Civilian” does not mean private sector. The BLS says “Civilian noninstitutional population (Current Population Survey)
    Included are persons 16 years of age and older residing in the 50 States and the District of Columbia who are not inmates of institutions (for example, penal and mental facilities, homes for the aged), and who are not on active duty in the Armed Forces.”….
    “Labor force (Current Population Survey)
    The labor force includes all persons classified as employed or unemployed in accordance with the definitions contained in this glossary.
    Labor force participation rate
    The labor force as a percent of the civilian noninstitutional population.


  2. Surely civilian non institutional population, and the civilian labour force participation rate are two different things.


  3. Thanks for that, really useful. But I still don’t get why we need all these definitions – why not just ‘all those of working age not in the army or prison’?
    But will edit accordingly. Much obliged.


  4. You also have to include the CES Birth/Death model in the analysis, which was down 11,000 jobs for last month. And this month is when the annual amendment to their figures is released. In January 2011 they ‘lost’ 2.867 million jobs that had been ‘created’ by their statistical model in 2010.

    Also the labour under utilisation index is at 15.2%. This is the PhD flipping burgers or sweeping floors type scenario.


  5. Which may explain why rail freights been increasing, albeit slowly, since 2009 without an increase in Jobs. Rail freight has traditionally been a leading indicator or employment growth, which might seem counter intuitive.

    Unlike money which can be made out of nothing, real stuff like farm machinery, needs raw material stuff like steel plate and engine blocks to make the new combine harvesters than Brazil just ordered from John Deere. The raw material stuff and the finished stuff are transported by rail, hence its a leading employment indicator.

    Here are the numbers Rail Time Indicators – Jan 6 2012, these are industry numbers from the Association of American Railroads.


  6. From his explanation of civilian non institutional population, that is the population not in institutions such as jail or armed forces etc.

    You quoted civilian labour force participation as being private sector work force, I don’t know if that is correct, but it is obviously not the same as non institutional population. One is a measure of population, one of a work force. To my reading his explanation did not necessarily make your statement incorrect. I don’t know if it’s correct though.


  7. “But I still don’t get why we need all these definitions”

    Its just another one of those make work rackets you find in all large organisations, more definitions means more measuring, more surveying, more spreadsheeting, more data to mine. Data’s like money, it’s made from thin air – just digits in an ethereal clouds.


  8. Bill Frezza of Real Clear Markets, claims he knows The Root Cause of Market Failure In Higher Education, that leads to all those PhD’s in Art History flipping burgers. What’s more there’s a Made in China solution.

    “China plans to phase out college majors that consistently produce unemployable graduates. Any program in which 60% of the graduates failed to find work for two consecutive years will face funding reductions until supply was brought back into balance with demand.”

    Another fine example of Schumpeter’s notion of Creative Destruction, which he says he got from Karl Marx.


  9. To reduce unemployment by one million all that has to happen is the creation of 1,000 new jobs a day, every day, seven days a week, every week for three years……..


  10. regarding the ‘blame london for everything’ style postings, I noticed this line tucked away in a quote under one on zero hedge ( –
    3.13 Our proposals apply to all UK authorised investment firms and overseas branches of these UK firms. These requirements will not apply to incoming EEA firms conducting investment business as under MiFID regulating client assets is a home state responsibility.”
    – EEA is euro economic area, it was some euro regulating thing – it seems to me that the FSA could only regulate UK based firms – the French/German/Italian etc ones could do whatever their governments wanted. Doesn’t make it all right and fine and breezy, but when French/German politicians rant about anglo-saxon blah blah, it’s worth remembering that a huge proporttion of people making decisions there are european and american. I found a report from about 2003 (…396b…/bc_rs_citysimporteu_es.pdf) by the corporation of london, which states “German, French and Italian banks account for a combined 30 per cent of the foreign lending from London” – presumably quite a lot under the ‘home state responsibility’ mentioned before. A report in the FT here ( mentions the impact of the Big Bang, says that that US investment banks and their culture virtually wiped out the old City ‘merchant banks’ (I seem to remember hearing this was due to their old-school separation of insurance/domestic banking etc, but could be wrong). . Greed and what they call “reputational issues ” then reduced that number to 5, and 2008 reduced that to 3.
    – The FT article seems to still be trying to given an anti ‘anglo saxon’ spin; I seem to remember a radio programme years ago about the big bang and american investment banks taking over, that said the only non-american bank that kept up with them was German. The FT article instead tries to spin it as ‘anglo saxon’ banking – then seems to go on to praise the head of Bank of America as being from sounder stock than the nasty investment chaps. Hmm..not so sure about that….anyway the evil-limeys-polluted-the-holy-american/euro-banks line should be taken with large container loads of salt I think.


  11. At the risk of ridicule, I found the vid below inspirational, in as much as it joined the dots for me, especially in a moral sense, as to the reasons for the mess WE are in.

    It features the American author & journalist Chris Hedges who has been there, done it & bought the T shirt. He worked as a correspondent in the various Eastern European revolutions against the USSR, Sarajevo, & has spent years covering the wars in the Middle East etc etc.

    He covers topics such as :- The death of the liberal class, Obama winning an award as marketeer of the year, for getting himself elected & the corruption of democracy by corporations such as Goldman Sachs. The vid is 3 hours long & covers other subject matter, such as religion, the nature of war, etc. It would be naive to believe everyone would agree with all he says, as I do, but I post it here on the off chance it might effect someone else in the positive way it has affected me, profoundly.


  12. Also risking ridicule, I reveal what has inspired me today is news that Banque Populaire V with a crew largely made up of Frenchmen with others from Canada, Spain and good old UK has taken the Jules Verne Trophy.

    As long as inspired people can circumnavigate our globe by sea entirely on natures wind power in 45 days on a boat sponsored by a Bank, there’s hope.

    I will of course continue my doomed to failure personal protest against the main stream as I have mentioned before, but if anything, with a spring in my step because of the above.

    But to be honest having only ever competed against myself on the water, I would not have any idea just how punishing it must be to spend 45 days in a washing machine on fast spin whilst being dropped from a height of 6′ only to have it repeated a few seconds later.

    Perspective, it helps me?


  13. Interesting article. Couple of points to remember: firstly, it’s all cyclical; Okun’s law as graphed on wikipedia does not include the period of the last great depression, so it’s perhaps unsurprising that it breaks down now. The only other period of market atrophy since then was the 70s, which weren’t *credit* deflationary as now.

    So it doesn’t go in a straight line. Also, new technology is inherently deflationary, which is the point the article illustrates: it destroys outmoded jobs as it increases production efficiency. This is painful short-term, but eventually new industries are born and people find other, less boring stuff to occupy themselves. Cf. the railway boom in the 1800s and the long depression that followed.


  14. “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.”

    Mmmm, I’m not sure they will. The Fed is pumping money into the ECB now to avoid that scenario, and will continue to do so ad infinitum. They will do anything necessary to protect Wall St and the banks….maybe a little thermonuclear device detonation somewhere to focus folks minds, a false flag attack?

    I think that the Dollar hegemony is the key, if it looks like they risk losing that status then, who knows what lengths they will go to? and I think that there are signs that other nations would like to be free of the dollar as reserve currency.


  15. Yes, I was gladdened by this new today too. Top achievement by all concerned and hearty congratulations are due.

    I do fancy making an ocean leg but was thinking rather more of fending off downwind queasiness while doing the Canaries to the Caribbean with a few good books…


  16. While I don’t think even the neo-cons are barking enough to nuke themselves, whatever the palls of smoke standing over *cough* certain other events, I would certainly go along with this ultimately being what the dollar is backed by since the closing of the gold window in 1972: the world’s largest military and stockpile of nuclear warheads.

    However, history says that no-one has ever kept the plates spinning for ever.


  17. Ah, then on the basis of the old saying you are clearly a ‘Gentleman’. I’m afraid anything off the wind I hate, give me a beat, windy, wet, wild and often …wonderful. Can’t think why but it’s the only time I love being exhausted. But past tense for me now I think, too bloody old!


  18. Well, I figure start at the bottom and work your way up. I have read of enough stories of people going plum crazy on a small boat on the open seas. Cape Horn can wait!


  19. I think that the fat man promised a result about a month ago, maybe he had his fingers crossed. As I see it this deal for a 50% haircut doesn’t allow the bondholders to do a runner with the remaining 50%. Instead most of it gets re-invested with the same dodgy issuer. How mad is that?


  20. The other big issue with the jobs numbers, the one thing that never gets talked about in the MSM, is how much these new jobs pay. Even if we add 200,000 jobs a month for the next 5 years, if they are all minimum wage, then these aren’t real jobs. You cannot live in the USA on minimum wage working 40 hrs a week. We would need 1-2 min. wage jobs per person to allow people to afford to live in this country. So we will never get a job that pays enough, or enough work to make up for low wages. It is false employment. I am in my mid-twenties, living in the USA, and the future looks very bleak for myself and my peer group. What lovely choices. I can work 60+ hours a week and be poor, I can sell my soul to a corporation and work 60+ hours a week and be ‘well off’ or I can be a student in an eternal debt spiral. God Bless America!


  21. But to be honest having only ever competed against myself on the water

    For those of us who have competed against others on the water, it only gets worse. Well, someone has to come first, and therefore someone has to come second. Naturally someone has to come last as well. Usually that is me.

    “Give me the fastest dinghy in the world and I will still be slower than you”


  22. The feel good stuff is for the folks with jobs who vote. They’re OK and they don’t want to be made to feel bad because so many others have been dumped on the scrapheap.

    The 23% unemployed are mainly among the 50% that don’t vote, so they don’t matter, as far as the administration is concerned.

    In the last ten years the US has lost millions, probably tens of millions of jobs to off-shoring. The property boom and massive credit expansion in the early 2000’s obscured the consequences. With the property bust, it’s become evident that much of America’s workforce is uncompetitive internationally, unless they are prepared to work in the underground economy at below minimum wage under unhealthy and unsafe conditions, as very large numbers of illegal immigrants do.

    There are only two options, protectionism, which is ruled out by the overall globalist strategy, or wage convergence with the mainly Asian competition.

    Wages are sticky downwards, so the thing is to promote mass third-world immigration, legal or otherwise — to undermine the bargaining power of labor — and to trash the currency as fast as possible, i.e., by money printing, a policy that US Treasury Secretary Geitner is urging on the European Central Bank. Everything else, I suggest, is spin and bollocks.


  23. @Black Swan

    You are absolutely correct and its exactly the same here in the UK. Lots of very high skilled engineering jobs have been lost and replaced with minimum wage retail and service industry employment. The Government then forces these formerly highly skilled and well paid workers to take these jobs and of course they then no longer show up on the unemployment register. But the figures don’t show the huge drop in living standards and loss of skills and manufacturing. The middles classes therefore end up poorer, much poorer. We desperately need to find a way back into manufacturing because at the moment everything seems to be outsourced to China and the far east. The situation here for young people seems particularly bleak at the moment (although its even worse in other European countries) and is a recipe for future discontentment and trouble.


  24. Both very good reads. Toqueville was definitely talking about me! Hard to shake off that inertia… And not the first time I have heard very good things about Tokyo. Such a damn shame about Fukushima. Wish I had visited before.


  25. Robert
    I wouldn’t agree with that, John & Chris both have expertise & wisdom based on their own lives & experiences. I think they are both teachers, as are others, who collectively give a picture of the whole. From this we can piece together our own ideas, based on our own unique experiences.


  26. Ditto, in Ireland.
    I have become obsolete due to outsourcing, I moved to Ireland from England because of outsourcing, then 5 yrs later it caught up with me. I later had to sell my house & then moved to Northern Ireland for 2 large sculpture commissions, which I finished. As this sort of work was also drying up & I had no work, I lived off some of my savings whilst investing the rest in a small business whilst waiting for a 3rd commission to work on. This job was cancelled last minute, due to one of the sponsors going bust.
    As my partner could not find work, ( N.I. has been badly effected by the republics problems } this left us in a hole. So we were forced to sign unemployed. I then started a 6 months ” Steps to work” test trading programme.

    My product is good & sold as well as similar products, if not better. According to retailers I supplied, business was down 40-50% & partly because of the time constraints & lack of funds, I was unable to build up a sufficient head of steam by the end of the 6 months in order to be able to sign off. Invest N.I. are not interested in manufacturing as far as I can tell, any grants are match funding & as the banks are not interested unless you already have the money or can turn lead into gold, I had to sign on again.

    Invest N.I. had to give 17 million back to the government due to the fact that start up businesses could not get the other 50% needed. For the sake of at the most £3000, I am back on the dole & because I am 54 yrs old & there is not much likelihood of my getting work in the distant future, the state will be paying me that sum anyway.

    I was told by Invest NI that all their grants were to be concentrated on young graduates. Fair enough, but if I could have turned my 10 outlets into 50, I would have been by that time in a position to employ a young person. It might not have been the best job in the world, but youngsters without degrees need jobs too.

    That is why I am here, I had watched on the news all this stuff about Lehmanns, Fannie Mae & freddie Mac & it didn’t make any sense to me. I decided to try & find out the why of it, so as the MSM is basically propaganda, I turned to the web. That is my story, I tell it because I think that it is important for people to realise that somebody who has worked hard all their life & is doing well, can then suddenly, because of external events, of which they have no control, slide down a greasy pole to the bottom.


  27. And what musings might the elite be up to now as to what to do with the resulting flotsam and jetsam… er people, so unfortunately left out in the cold. (Though it isn’t much better to be left out in the warm.)


  28. “What a mindless undertaking, no wonder it was sponsored by a bank.”

    Body Corporate needs publicity and therefore to advertise.

    Option One:
    Sponsorship of event which tests Technical skills as well as human skills and which if successful brings about improvements to both that we all benefit from in one way or another.

    Option Two:
    Blanket advertising posters and hoardings on every surface that stands still long enough for it to be stuck to, polluting the environment regardless of how ‘pretty’ a view might be. Saturation of Radio and TV with as much as ‘they’ think people will stand of shouty, garbled talentless audio and visual graffity.

    You describe Option One as ‘mindless’. Option two is apparently effective because it acts on our subconscious and regardlessof how we think we feel about it, we tend to obey our subconscious. So you would presumably call this ‘mindful’?

    I know which I prefer.


  29. There’s an interesting school of thought that says continued mechanisation, and consequential unemployment, is inevitable to the point where it should be embraced rather than fought against, to free people from mundane jobs better suited to machines, and the resulting joblessness and poverty should be avoided by a reversion to a resource-based economy, which will also resolve the current financial crisis, end the banks’ monopoly of wealth and rebalance and reset the playing field. See Zeitgeist: Moving Forward ( and the Venus Project (


  30. Am I wrong in thinking that ‘disabled persons’ are counted in the US as unemployed long term?

    Further does not the UK exclude ‘disabled persons’ from unemployment statistics (thereby reducing them conveniently)?

    Answers gratefully received.


  31. BLS provides lots of data and lots of different definitions because they are useful for some purposes and they give a clearer picture of where the labour market is. And the big picture is that the labour market is still dreadful, not just in terms of the number of people unemployed or under-employed but also in the pay cuts people have been forced to take to hold on to their jobs. This has been and still is a disaster for millions of Americans.


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