THE FAKE US RECOVERY: Slog doubts vindicated by new jobs data

A long trail of Slog posts from January onwards have ploughed a steady but pretty lonely furrow saying that the US ‘recovery’ data was selective, optimistic, and altogether something of a mirage. Now the rest of the Commentariat are catching on.

January 7th 2012

‘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.’

‘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’…

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.’

On February 4th 2012:

‘If the US economy really is creating jobs, then you’d expect the rate of creation to be up there with growth. But it isn’t. In the last quarter of 2011, American economic growth was recorded as 2.8%. In that period, roughly 145,000 jobs were ‘created’ according to the Labor stats. That adds up to a 0.3% growth in jobs. New technology to cut costs is gradually rendering more and more of middle class America unemployed. 243,000 jobs were ‘created’ in January alone – still only a 0.5% increase.’

February 28th 2012

‘New orders for durable goods fell in January 2012 by 4% – the largest drop for three years. And a separate report showed US property prices falling sharply during December 2011.

The latter data set wasn’t that unexpected – to me, anyway: pre-Christmas flatlining property markets are not exactly new. But durables are always a key indicator of how happy people are to spend big bucks on big things. They’re a reflection of confidence….or lack of it.’

April 4th 2012

‘The growth figures have been sexed up, the unemployment numbers deliberately misread, and now the Federal Reserve has confirmed that America is out of the woods: the vast majority of Fedders think QE has done its job, so it’s onwards and upwards….The US establishment media went to town during January 2012, making some outright silly extrapolations from extremely flakey jobs and purchasing index data. But [Bernanke] wasn’t having any of it. At the February FOMC, he talked of an improvement in employment, but described it as “far from normal”….perhaps his polite way of saying he didn’t buy the US Labor Department’s interpretation either. The Fed Chairman rounded off his piece by saying he believed “healthy job growth requires stronger economic growth, and currently I do not see job growth in line with the current trend in GDP growth.” Yesterday, the overwhelming majority media view was to interpret the ditching of QE3 as ‘no longer necessary’. I don’t.’

May 10th 2012

‘As early as 2010, I posted that a domestic consumption recovery in America would just make the debt worse. The trade figures are proving the point in spades.Despite the value of the dollar being down 3.3% against a basket of currencies, the trade deficit widened more than forecast in March as American demand for crude oil, computers, automobiles and televisions raised imports to a record. The gap grew 14% to $51.8 billion, the Commerce Department reported in Washington today. A 5.2% leap in imports, the biggest in more than a year, dwarfed the 2.9% gain in exports.

‘Not only is the US consumer buying more imported goods, the cost of raw materials is costing US business more as the Buck weakens. Crude oil imports in March increased to $29.2 billion from $23.4 billion the previous month, reflecting higher costs. The increase in imports was broad-based with demand for foreign-made computers, telecommunications gear, automobiles and parts, televisions, cellular phones and clothing all doing better than ever.’

So today, July 6th 2012, people are getting a little more grown up and suspicious about the Black Dude’s ‘recovery’. This time, Bloomberg refused to put out more flags:

‘Payrolls rose 80,000 last month after a 77,000 increase in May, Labor Department figures showed today in Washington. Economists projected a 100,000 gain, according to the median estimate in a Bloomberg News survey. The unemployment rate held at 8.2 percent. Private employment, which excludes government agencies, increased 84,000 in June, the weakest in 10 months….Stocks fell on concern hiring has shifted into a lower gear, restricting consumer spending and leaving the economy more vulnerable to a global slowdown. The figures underscore concern among some Fed policy makers that growth isn’t fast enough to lower unemployment stuck above 8 percent since February 2009…’

‘Anxiety mounts as US limps into second half of Year’ said Reuters, adding ‘From manufacturing to job growth to consumer spending, the numbers have been grim, and economists are wondering whether they need to dial down forecasts for the remainder of the year….’

Maybe they should never have dialled up La-la Land in the first place.

Fab Fact: No US President has ever been re-elected with an unemployment rate above 8%.

48 thoughts on “THE FAKE US RECOVERY: Slog doubts vindicated by new jobs data

  1. Has everybody finally figured out that every single country on earth has way more debt than they are admitting to, is lying about their economy, and pretty much making it all up as they go along? We are depending on the desperate ego fueled optimism of smiling “confidence” men that haven’t a clue.


  2. You are correct, as usual. Even more worrying for the US is that the paltry growth there has been has been bought by completely unsustainable government spending. It will be interesting to see what spendaholics like Krugman have to say about this – spend even more no doubt!
    Thanks for the rest of the week’s articles, which were bang on too.


  3. In addition to this set of not so beautiful numbers is the cogent summary by Bruce Krasting, on his blogsite, pointing out the impending disaster in the Socila Security Fund. The real situation is hidden by the assumptions of the Congressional Budget Office in forecasting the state of the Fund. It assumes 4% economic growth and re-investment of moneys at 4% and unemployment trending down to 5% over the period to 2021.
    As Mr. Krasting points out, these are somewhat optimistic assumptions. If more realistic numbers are plugged in, the Trust Fund runs out of money by 2023. Long before this happens something will have to be done, but given the election cycle it will not even figure as an issue this time around. what it means is that all those peole around 55 years of age may be waiting around a lot longer for their retirement checques and the amount will be substantially lower than what they were expecting.
    The increase in the ‘marginally attached group’ will become a real political headache and given the propensity of the ‘Baby Boomers’ to look after themselves first at the expense of everyone else, it promises to be a real bunfight.
    Sure looks like a decade of stumbling in and out of some very deep trenches towards the sunlit uplands!


  4. Harold,
    It’s happening with individual cities already, so some folks will not be getting the retirement funds they were expecting as the cities go bust.
    Also, last year’s “stimulus” for capital goods (ie a tax break to encourage people to spend in 2011) just means that they won’t be spending this year, which pretty much guarantees a decline in the economy, like all the nonsense “scrappage” schemes when they end. They can keep pretending, but reality keeps on getting closer.


  5. It is only what I expect. As the economy contracts ALL NEW TECHNOLOGICAL EFFICIENCIES have to be used to maintain profits.

    Can’t wait for the first politician to admit there is a problem and even if we managed to compete and sell into a growing consumer base in China / India they end up with the same problem anyhow.

    The contagion is complete already we just refuse to see it. if a person can produce more than they can “afford” to consume in a day who is going to buy it?


  6. Agree on this

    “all those peole around 55 years of age may be waiting around a lot longer for their retirement checques and the amount will be substantially lower than what they were expecting.”

    That lower than expected income is realised by an even deeper contraction of the economy and that has not yet begun.

    Here is the question, do we manage to get out of the current situation before the next one begins?


  7. [OT]:
    Welcome to the European Union 2012:

    “For the last several days, I’ve been weaving between northern Italy and Switzerland […] Every single time I’ve crossed the border, I’ve been met by rather snarly police on both sides; they’re stopping cars, turning people’s trunks inside out[…..] No big surprise, electing Marxists and Neo-Nazis tends to bring that sort of change. Border controls, currency controls, wage and price controls– these are the usual tactics of desperate, insolvent governments.”


  8. O/T,perhaps,’fake US recovery’,fake LIBOR from the Quakers’successors at Barclays,now Deutsche Bank in the frame,fake everything in the Spanish holiday home speculation banking business,Gillian Tett(author,Fools Gold,about the last derivatives led crash)giving’5reasons you should not leave your desk this summer’,markets tend to triumph when the TPTB are either at the tennis or enjoying their August break.


  9. O/T
    I know this film was made by North Korea and I would not defend the North Korean regime but, interesting none the less.


  10. @Mark. Good point. I spent my professional life advising younger colleagues to take out a pension plan, only to see my own plan turn to dust and become worthless. (Most of the youngsters ignored me of course, as the didn’t beleive they’d ever grow old.) I wouldn’t know what to advise them now, and I wonder what their old age will be like. God help them if the current situation is extrapolated forward.


  11. Can anyone cite me a single market that isn’t rigged? The worst is yet to come when it is discovered that deriatives do not net to zero. The only question is how many trillions don’t exist.

    But to the point of the article it’s not just unemployment that is a problem but the scandal of underemployment keeping hard working, deserving people poor. I advocate MMT and the Job Guarantee.

    MMT is growing and winning the argument.


  12. @shaftedagain
    Here is what is written underneath the first video:

    Here is the formal statement I gave to Police on 16 June, 2012: On a trip to visit family in Seoul in April, I was approached by a man and a woman who claimed to be North Korean defectors. They requested a meeting the following day to hand over a film that needed to be translated, and I agreed to meet with them. They presented me with a DVD disc that recently came into their possession via the recent arrival of a defector into their group. They asked me to translate the film and “make sure the world saw it” and an agreement was made to protect their identities (and mine). Despite my concerns about what I was viewing when I returned home, I proceeded to translate and post the film on You Tube because of the film’s extraordinary content. I have made public my belief that this film was never intended for a domestic audience in the DPRK. Instead, I believe the ‘defectors’ specifically targeted me because of my reputation as a translator and interpreter. Furthermore, I now believe these people work for the DPRK. The fact that I have continued to translate and post the film in spite of this belief does not make me complicit in their intention to spread their ideology. I chose to keep posting this film because – regardless of who made it – I believe people should see it for the issues it raises, and I stand by my right to keep sharing and discussing this film.



  13. The system is dead, being kept upright by a few delusional people. All Countries are in debt, all banks are in debt, all populations are in debt. Everybody holds paper on everybody else, nobody holds the cash. Can you see the problem? Perpetual growth based on credit (debt) is a myth. Resolving a debt issue by more debt is insane. Mass default and debt forgiveness makes more sense to me.


  14. Pingback: John Ward – The Fake US Recovery : Slog Doubts Vindicated By New Jobs Data – 7 July 2012 | Lucas 2012 Infos

  15. The irony is that it is mostly true! I suspect the North Koreans may have outsourced the production to the Chinese or renegade South koreans.


  16. @CP: Interesting article, thanks for posting. I mostly agree with Charles Moore but have a few comments:

    – I agree that Osborne is struggling to repair the economy. In fact he’s mostly applying the same sticky plasters that Brown did. There is no serious evidence available that Zirp and QE actually work.

    – He lambasts Osborne for er…lambasting Balls. Maybe he’s right. I don’t think so. In truth, Osborne/Cameron and the Tory Party failed to win the last election precisely because they didn’t pin the blame for the collapse of our economy onto Brown, Balls and New Labour where overwhelming blame rightly belongs. Better late than never because Labour’s poll ratings are looking dangerously high!

    – Moore is probably wrong to say that everybody important got it wrong regarding the looming credit crunch back in 2007, as if some sort of errant analysis went on in the Brown/Balls corridors of power. I don’t think it did. They were always arrogant people and simply ignored the warning signs (there were plenty of them) because their heads were so far up their asses in a false belief of their own making that this time round, Labour’s economic policies were right. How wrong they were.

    my 2C worth :-)


  17. You only get the ‘civilization’ you can afford.
    We can no longer afford anything.
    Ergo; a return to the dark ages for us all.


  18. Very interesting report on solar energy. Say what you like about the Germans but, they have their heads well screwed on.


  19. Japanese artist Isao Hashimoto has created a beautiful, undeniably scary time-lapse map of the 2053 nuclear explosions which have taken place between 1945 and 1998, beginning with the Manhattan Project’s “Trinity” test near Los Alamos and concluding with Pakistan’s nuclear tests in May of 1998. This leaves out North Korea’s two alleged nuclear tests in this past decade (the legitimacy of both of which is not 100% clear).


  20. Pingback: FAKE US RECOVERY: More fuel for Slog’s argument | A diary of deception and distortion

  21. Pingback: John Ward – Fake US Recovery: More Fuel For Slog’s Argument – 7 July 2012 | Lucas 2012 Infos

  22. Zackly.
    I tell everyone I know in their 50s, that they should count on one thing. Their pension will be worthless when they get it (either from hyperinflation or a busted banking system),
    sorry two things, and if there was any risk that their pension might have a value,it will be stolen from them (by either the commission men, or the Treasury.
    Buy gold bullion coin, your only hope.

    Sorry, I’m only posting cos I’m indoors with an infirm mother who just wants to be at home, bless her tired old soul. Apologies.


  23. Obama needs to be booted out as he and his team (David Axelrat and Valerie Jar-rat) are either downright malicious or suprememly stupid. The big bogeyman in 2008 was – and still is – the economy, which the U.S. government has done nothing to redeem. Just by cutting corporate tax rates 50% could have sparked recovery. How about slashing small business regulations? How about some reciprocity with nations like China, make them adhere to our own onerous standards? Nope, none of that: only dollar-printing and public-sector bloating. The Black Dude belongs in the political dustbin along with Marion Barry. Mitt Romney founded Bain Capital: surely a sign he has significantly more financial nous than the current dumbass.


  24. Shadowstats shows the ‘true’ unemployment rate as being around 23%. This is because both the short term discouraged from work and the long term discouraged are added into the total.

    I spent a little time looking at the BLS stats a couple of years ago, and concluded they were being manipulated downwards, by sequential data changes, which I think is shown by the increasing divergence between the shadwostats totals and the official BLS totals. Even the U6 broad rate is not really comprehensive anymore.

    The bald use of smoke and mirrors is truly alarming, as no-one apart form the outliers of commentators (such as ZeroHedge) really seems to care anymore.

    Even a healthy economy would find it hard to produce enough new jobs to keep up with the large increases in US population which has grown by over a third since the early 1980’s. I suspect the divergence will become ever greater, as the US economy can no longer grow at a rate fast enough to keep up with population increase.


  25. Further to my earlier post, I should add that I also looked at UK unemployment stats at the same time, and concluded that the ‘true’ rate of unemployment was between 18-22% compared to the Govt. rate of around 8.5% at the time.


  26. Bain Capital… a company that made money by closing down, breaking up, and selling off companies that had employees in exchange for huge profits in Romney’s pockets… that he then snuck out of the country to off shore banks so that he could avoid paying taxes in the country he wants to be President of? sounds great. I guess now Romney can line his pockets with the proceeds from the selling off an under performing USofA. You think cutting corporate rates 50% will help? I am assuming of course you are one of these paid right wing blog posters running around shooting off delusions into the ‘net, hoping they will be adopted as facts… good for you people are that stupid.


  27. Cutting corporate rates would help a great deal, as would easing the onerous burden of anti-business regulation here in the US. It did wonders for Ireland in the 1990s (only to be squandered in the Naughties on real estate speculation and government largesse). America needs to encourage business start-up and entrepreneurship, make it attractive to invest and go to work. Obama has done nothing except expand the debt/public payroll. He and his team need to go. (FYI Apple’s market cap alone exceeds the entire Greek GDP – maybe you lazy Stavropopopopolouses ought to take a leaf out of Bain Capital’s book and start being productive instead of skiving off at 50, eh?)


  28. People really ought to be questioning the very concept of perpetual economic GROWTH as a reasonable goal on an already-overpopulated and depleted planet.

    Look up “peak oil + recession” for a geological barrier to mindless expansion that few people seem to be aware of. They cling to the idea that cheap energy is owed to them, and all problems could be fixed with clever policy, even though finite natural resources make life possible, not money.

    Educators like Richard Heinberg (one of the best) keep trying to explain the laws of nature pertaining to futile economic growthism, but only a fraction of people will listen.


  29. Pingback: OBAMA’S ‘HOUSING REBOUND’ LIES LAID BARE: Total range of data shows that this is still the ‘Glitz bricks’ phenomenon. | The Slog.

  30. Pingback: Obama’s ‘Housing Rebound’ Lies Laid Bare: Total Range Of Data Shows That This Is Still The ‘Glitz Bricks’ Phenomenon – 10 February 2014 | Lucas 2012 Infos

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