US Adds 213,000 Jobs as Unemployment Hits 4 Percent, Wages Rise

By Thomson Reuters – Re-Blogged From Newsmax

U.S. job growth increased more than expected in June as manufacturers stepped up hiring, but steady wage gains pointed to moderate inflation pressures that should keep the Federal Reserve on a path of gradual interest rate increases.

Nonfarm payrolls rose by 213,000 jobs last month, the Labor Department said on Friday. Data for April and May was revised to show 37,000 more jobs created than previously reported. The economy needs to create roughly 120,000 jobs per month to keep up with growth in the working-age population.

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Nearly 102 Million Working Age Americans Do Not Have A Job

By Michael Snyder – Re-Blogged From Freedom Outpost

Don’t get too excited about the “good employment numbers” that you are hearing about from the mainstream media.  The truth is that they actually aren’t very good at all.  For years, the federal government has been taking numbers out of one category and putting them into another category and calling it “progress”, and in this article, we will break down exactly what has been happening.  We are being told that the U.S. unemployment rate has fallen to “3.8 percent”, which is supposedly the lowest that it has been “in nearly 50 years”.  If these were honest numbers that would be great news.  But these are not honest numbers…

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Unemployment Rate Drops Below 4 Percent for First Time Since 2000

[Not included in the 4% number are the 6 million or so Americans who have dropped out of the labor force since the last Recession, as alluded to near the end of the article. – Bob]

By Thomson/Reuters – Re-Blogged From Newsmax

U.S. job growth increased less than expected in April and the unemployment rate dropped to near a 17-1/2-year low of 3.9 percent as some jobless Americans left the labor force.

The Labor Department’s closely watched employment report on Friday also showed wages barely rising last month, which could ease concerns that inflation pressures were rapidly building up, likely keeping the Federal Reserve on a gradual path of monetary policy tightening. Continue reading

Jobless Claims Fall as Job Market Strengthens

By Thomson/Reuters – Re-Blogged From Newsmax

The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to a tightening labor market and strengthening economy at the start of the year.

Initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 230,000 for the week ended Jan. 27, the Labor Department said on Thursday. Continue reading

Jobs, Wages, and Growth

   By Bob Shapiro

I posted an article wondering why wages haven’t been going up faster, considering that the Jobs picture looks so good. Though many of you may agree with the article, I’d like to offer an alternative point of view.

Have jobs been increasing dramatically? No, the official numbers are being misreported in news stories. What IS happening is that the US jobs market continues to lose full time workers while gaining a larger number of part time positions.

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Jobless Claims Hit More Than 44-Year Low

By Thomson/Reuters – Re-Blogged From Newsmax

[Fewer people losing jobs is good news, but it doesn’t address how many Americans have been unemployed for so long that they’ve given up hope of finding a job. I prefer this ‘Participation Rate’ chart. -Bob]

The number of Americans filing for unemployment benefits fell to its lowest level in more than 44 years last week, pointing to a rebound in job growth after a hurricane-related decline in employment in September.

Initial claims for state unemployment benefits dropped 22,000 to a seasonally adjusted 222,000 for the week ended Oct. 14, the lowest level since March 1973, the Labor Department said on Thursday.

Alternative Unemployment Measurement

By John Williams – Re-Blogged From http://www.ShadowStats.com

Counting All Discouraged/Displaced Workers, May 2016 Unemployment Rose to About 23.0%. Discussed frequently in the regular ShadowStats Commentaries on monthly unemployment conditions, what removes headline-unemployment reporting from common experience and broad, underlying economic reality, simply is definitional. To be counted among the U.S. government’s headline unemployed (U.3), an individual has to have looked actively for work within the four weeks prior to the unemployment survey conducted for the Bureau of Labor Statistic (BLS). If the active search for work was in the last year, but not in the last four weeks, the individual is considered a “discouraged worker” by the BLS, and not counted in the headline labor force.

ShadowStats defines that group as “short-term discouraged workers,” as opposed to those who, after one year, no longer are counted as “discouraged” by the government. Instead, they enter the realm of “long– term discouraged workers,” those displaced by extraordinary economic conditions, including regional/local businesses activity affected negatively by trade agreements or by other factors shifting U.S. productive assets offshore, as defined and counted by ShadowStats (see the extended comments in the ShadowStats Alternate Unemployment Measure).

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Jamie Dimon: School Dropout Rates Are ‘National Catastrophe’

By R Williams – Re-Blogged From Newsmax

Jamie Dimon, chairman and chief executive officer of J.P. Morgan Chase & Co., said America faces a “national catastrophe” from a failing educational system with high dropout rates and young people who aren’t prepared to enter the work force.

“We need to get kids getting out of high school, who go on with a job, or go on to college and that leads to a job,” Dimon said in an interview with Business Insider. Dimon’s bank last week announced a $6 million investment in education for students in the South Bronx, a notoriously blighted part of New York City.

 “Business has to be involved locally with civic society, in this case schools, to get the kids trained to have a job,” Dimon said. “There are plenty of jobs out there.”

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The Great Western Economic Depression

By Jeff Nielson – Re-Blogged From http://www.Gold-Eagle.com

Western economies are “recovering”. How do we know this? We are told this, over and over and over again by our governments. Then this assertion is repeated thousands of times more by the dutiful parrots of the corporate media.

The problem is that in the real world there is not a shred of evidence to support this assertion. In the U.S.; ridiculous official lies were created claiming the creation of 15 million new jobs . In reality, there are three million less Americans with jobs today than at the official end of the “recession”.

These imaginary jobs are invented by assorted statistical frauds, with the primary deceit being so-called “seasonal adjustments”. To be legitimate, all seasonal adjustments must to net to zero at the end of each year. Instead, in the U.S.A., the biggest job creator in the nation every year is the calendar.

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Is Stagflation Stalking?

By Gordon T Long – Re-Blogged From http://www.Gold-Eagle.com

It is important to anticipate whether Stagflation is stalking because the yield curve will start pricing it in which will place equity yields, earnings and PE growth multiples at risk.

We believe there are clear signs of stagflation already occurring and according to the recent Global Fund Manager Survey many already believe, if we don’t have elevated Inflation and an emerging period of Stagflation, we can soon expect it!

Yield Curve

What is particularly critical to the equities markets is how the yield curve will react differently regarding whether it anticipates increasing Inflation through Reflation or Stagflation. If it views reflation the yield curve will shift up but also steepen as long-term yields increase faster than short term yields. If it sees stagflation because the drivers for inflation also impede economic growth, then the yield curve also shifts upward,  but instead can be expected to flatten. The longer-term yields rise slower than the short term yields.

In both case yields rise which places pressures on equities but the shape of the yield curve has the most profound impact on equity prices. In the last 5 years  71% of equity index increases are a result of P/E multiple expansion from 10X to 18X. This places PE multiple of the S&P 500 currently in the 90 percentile of historical valuations relative to the last 40 years. Anticipating what may occur is presently of the utmost importance to smart investors.

The 10 Year US Treasury Yield lifted violently on the Trump victory and reflation policy expectations. After a brief consolidation it has again aggressively moved up but it is important to view this as part of three reasons bond yields increase – 1- Economic growth rate, 2- Inflation and 3-Creditworthiness. The current Treasury yield lift in my judgment is more about the pending US debt ceiling congressional hurdles and potential Creditworthiness factors than reflation or stagflation concerns.

Stagflation

STAGFLATION: “Is persistent high inflation combined with high unemployment and stagnant demand in a country’s economy”

Stagflation is very costly and difficult to eradicate once it starts, both in social terms and in budget deficits. It is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high. It raises a dilemma for economic policy, since actions designed to lower inflation may exacerbate unemployment, and vice versa. Historically, inflation and recession were regarded as mutually exclusive, the relationship between the two being described by the Phillips curve.

Economists offer two principal explanations for why stagflation occurs:

First (Think: ’70’s) stagflation can result when the productive capacity of an economy is reduced by an unfavorable supply shock that causes an increase in the price of oil for an oil-importing country. Such an unfavorable supply shock tends to raise prices at the same time that it slows the economy by making production more costly and less profitable.  Milton Friedman famously described this situation as “too much money chasing too few goods”.

Second (Think today), both stagnation and inflation can result from inappropriate macroeconomic policies. For example, central banks can cause inflation by allowing excessive growth of the money supply,  and the government can cause stagnation by excessive regulation of goods markets and labor markets. Excessive growth of the money supply, taken to such an extreme that it must be reversed abruptly, can be a cause. Both types of explanations are offered in analyses of the global stagflation of the 1970s: it began with a huge rise in oil prices, but then continued as central banks used excessively stimulative monetary policy to counteract the resulting recession, causing a runaway price/wage spiral.

Let’s consider the four elements of stagflation, 1- Inflation, 2- Unemployment, 3- Demand and 4- GDP Growth to see whether this is a real possibility for the US.

1- Inflation

According to The Federal Reserve, entrusted with monitoring and managing Inflation pressures in the economy, until recently it is has been low and well below the Fed’s 2% target.  But the times they are a changing!

Since this time last year inflation expectations have  been increasing steadily and rose even more dramatically with the Trump Presidential victory. The Trump spike was a result of his proposed economic stimulus programs such as Infrastructure and Defense.

However, it is isn’t just expectations that have been increasing, but also actual price tags.

Some price increases have been much higher than how such measures as the CPI tabulates inflation.

From a long-term historical perspective (if you believe government statistics) the inflation rate is still relatively low.

However, taking out “special” government adjustments such as “Substitution”, “Hedonics” and “Imputation” along with the other changes that have been made by the government since the early 80’s, we see the real picture.

ShadowStats.com which tracks inflation closely show that in fact if we consider inflation in terms of how the government calculated it in 1980 (before interest rates started falling abruptly) you find it approximates 10% per annum!  I personally believe this much more closely matches what the average US household would suggest they are experiencing.

CONCLUSION: We DEFINITELY have inflation and it is worse than the Federal Reserve acknowledges or is actually aware!

2- Unemployment

According to the government narrative we have low unemployment with concerns about a tight labor market. This is pure fabrication or minimally misinformation and distortion of the facts. John Williams at ShadowStats again shows the reality.

The ShadowStats Alternate Unemployment Rate for January 2017 is 22.9%.

We presently have a labor force participation level at historically low levels with nearly 100 million working age adults not in the work force and many with jobs not able to to get sufficient hours to support a middle class life style.

As Presidential candidate observed at a campaign rally in front of 30,000 people. “If the unemployment rate was really 5% do you think we would really have this many people here!” Do you believe government statistics or “your lying eyes”?

CONCLUSION: We have high a very high unemployment and under-utilization of the American workforce.

3- Demand

What we have in the US is “Artificial Demand” rather than “Stagnant Demand”. The difference being that the former temporarily camouflages the later –  but only temporarily as in reality we have “Stagnant Demand” being camouflaged by massive credit expansion and low finance rates. This only brings demand forward creating a demand void in the future.

Consider that Consumer Credit is rising rapidly in comparison to Disposable Income. In other words we are borrowing increasingly to make ongoing purchases but those purchases are not increasing. Debt is surging to buy the same amount of stuff — not more. In reality real economic demand is shrinking and is only presently artificially being supported.

CONCLUSION: We have Weak Demand being supported by high levels of credit in relationship to disposable income. 

4- Growth

How can the US current GDP levels seen to be anything other than terribly weak! Thus far this quarter 1Q17 is tracking at 1.8%

The common narrative is that the US is entering a golden age in its economy and that this growth will drive stocks ever higher.  The reality is that GDP growth has collapsed. The third quarter of last year (3Q16) was the quarter everyone thought signaled a new beginning with growth of 3.5%. However, the very next quarter’s growth (4Q16) collapsed to 1.9%.

Put simply, growth is NOT coming soon if at all. Even Trump’s top economic advisor has admitted that GDP growth of 3% is unlikely until the end of 2018.

CONCLUSION:  We have historically weak economic growth

Summary

It is hard not to conclude that we are already living in a period of STAGFLATION which the markets have yet to fully recognize (may we suggest “Cognitive Dissonance”?).

There is little way out other than praying for the Trumponomic Economic miracle that the markets are so clearly euphoric about!  Of course I have never found prayer as a reliable approach to investment strategy!

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Near-Record 94.6 Million Americans Aren’t in Workforce

Re-Blogged From http://www.newsmax.com

Behind the cheerful spin the Labor Department and government talking heads put on the official monthly jobs data is a sobering reality: a more-realistic unemployment rate is probably closer to 10 percent and a wide swatch of the American public remains out of work.

Friday’s report sketched a picture of a resilient job market that likely keeps the Federal Reserve on track to raise interest rates when it meets next month.

Yet the economy remains pocketed by weaknesses that have left many feeling left behind on the eve of Election Day. Job gains have been steady, but pay raises have only recently become widespread. And millions of Americans are working part time but would prefer full-time work.

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Unemployment & Civil Unrest

cropped-bob-shapiro.jpg   By Bob Shapiro

In Summer 1965, the US suffered through much turmoil, including the Watts riots.

Today in the US, we again are having civil unrest, but with a major difference. Today’s unrest appears to be more organized, with police and other authorities as specific targets.

Even the “lone wolf” attacks seem to have a common thread tying them together – Islam. Now, I’m not saying that most American born muslims are set on destroying our country, but before you dismiss me as a racist, you might want to reread the current events of the last couple of years.

Most of the press stories seem to be placing the blame squarely on the Republicans – currently in office and hopefuls on the campaign trail. While many Republicans in Congress are complicit with the policies that are hurting all Americans – including poor blacks – for the most part, they aren’t the ones coming up with these stupid policies.

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Primary Trend Indicator Generates A Long-Term Stock Market Sell Signal

By Robert McHugh – Re-Blogged From http://www.Gold-Eagle.com

For the first time in six years, our Primary Trend Indicator, a long-term trend stock market forecaster, generated a new signal, a Sell Signal on May 31st, 2016. The last signal change was a Buy in May 2010. These long-term Buy and Sell signals are rare, but have been very accurate at identifying the start of new long-term trends. This is a warning that stocks are about to enter a long-term Bear market, one that will likely be lengthy and deep based upon the market’s behavior after previous Buy and Sell signals from this indicator.

The most recent previous signal came on May 31st, 2010 when the PTI generated a Buy signal, and it remained on a Buy signal until May 31st, 2016. After that Buy signal six  years ago, the Industrials rose 8,152 points (an 80% gain).

The last time it generated a new long-term trend “Sell” signal was almost eight years ago, on September 30th, 2008, just as the autumn stock market crash started, when the DJIA closed at 10850. We saw a 4,400 point drop (i.e. 41 percent decline) after this sell signal was triggered.

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Failure to Launch

By Peter Schiff – Re-Blogged From Euro Pacific Capital

The popular belief that the U.S. economy has been steadily recovering has endured months of disappointing data without losing much of its appeal. A deep bench of excuses, ranging from the weather to the Chinese economy, has been called on to justify why the economy hasn’t built up any noticeable steam, and why the Fed has failed to move rates off zero, where they have been for seven years. But the downright dismal September jobs report that was released last Friday may prove to be the flashing red beacon that even the most skilled apologists can’t explain away. The report should make it abundantly clear that we are far closer to recession than recovery. But old notions die hard and, shockingly, most economists still believe that we have hit a temporary speed bump not a brick wall. But at some point healthy hope turns into dangerous delusion. We may have just turned that corner.
The report was horrific any way you slice it. The consensus of economists had expected to see 203,000 new jobs in September, not a particularly impressive number, but at least it would have been an improvement from the 173,000 new jobs that were added in August. Not only did September miss substantially, at just 142,000 jobs, but August was revised down to 136,000 (Bureau of Labor Statistics) (there were economists who had even expected August to be revised up to as high 247,000). This means that the last three months have averaged just 167,000 jobs, a level that is not even close to where we should have been in a real recovery. But it gets worse from there.

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Numbers Lousy – FED Scared Witless

cropped-bob-shapiro.jpg   By Bob Shapiro

Several statistics were reported this week, and in large measure, they disappointed analysts. Personal Income was up, but Personal Spending was up even more. This means that Americans were adding even more debt to their balance sheets. Since Saving is where the Capital comes from to help grow our Capitalist system, this means negative growth down the road.

PCE Prices were up only 0.1% in August (same as July), but these numbers generally are in the fairy tale category. Looking instead at the CPI, the way it used to be calculated in 1980 (via http://www.ShadowStats.com), inflation is running at around 7½%.

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How the Federal Government Betrayed Millennials

By Veronique de Rugy – Re-Blogged From http://www.Reason.com

Candidates running for president should take the following warning seriously: Years of bad government policies catering to interest groups have created a generation of young people facing tremendous challenges in the labor market and little chance to experience the good old American dream. We can hope that someone will put this government-created generation of disinherited at the center of his or her platform.

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US at War With Puerto Rico

cropped-bob-shapiro.jpg   By Bob Shapiro

The US is causing high unemployment, high and growing public debt, and an increasing reliance on handouts among the citizens of Puerto Rico. US federal laws are killing what could be a Free Market success in this territorial “possession.” Peter Schiff discusses below, the particulars of US stupidity on the island, making Puerto Rico another Greece waiting to happen, and he outlines easy solutions to the US caused socialistic destruction.

By Peter Schiff – Re-Blogged From http://www.Gold-Eagle.com

While Greece is now dominating the debt default stage, the real tragedy is playing out much closer to home, with the downward spiral of Puerto Rico. As in Greece, the Puerto Rican economy has been destroyed by its participation in an unrealistic monetary system that it does not control and the failure of domestic politicians to confront their own insolvency.

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The Persisting Slump In Factory Orders——‘Escape Velocity’ It Ain’t

While the payroll report commands almost all attention, the view from factory orders is simply much more significant. Even if we accept that payroll growth is steady at something greater than 200k per month, that is still at least two steps removed from actual economic activity as is intended from that same orthodox framework. Jobs are supposed to lead to income which is supposed to drive further spending, so the jobs figures themselves aren’t even the true gain. It is always just assumed that spending goes with jobs without ever dissecting the processes that lay in between.

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The Warren Buffett Economy——Why Its Days Are Numbered (Part 4)

By David Stockman – Re-Blogged From http://davidstockmanscontracorner.com

….As reviewed in Part 3, the very idea that 12 people sitting on the FOMC can adroitly manipulate an economic ether called “aggregate demand” by means of falsifying market interest rates is a bad joke when in it comes to that part of “potential GDP” comprised of goods production capacity. In today’s world of open trade and massive excess industrial capacity, the Fed can do exactly nothing to cause the domestic steel industry’s capacity utilization rate to be 90% or 65%.

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How’s the US Economy?

cropped-bob-shapiro.jpg   By Bob Shapiro

How’s the US Economy doing? That depends on who you ask.

The “official” unemployment rate, at 5.7% is a little high by historical standards, but way down from the peak of the Great Recession. The US Dollar is way up in Forex Markets, and that usually means that the US Economy is booming and everyone wants our strong currency. GDP is up again – at a 3.8% annual rate during the 2nd half of last year.

Who could ask for anything more?! Let’s look at these and other numbers a little more deeply.

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Is Washington Fabricating the Economic Data?

Bureaucrats in the U.S.S.R. kept issuing glowing economic reports right up until the Soviet state collapsed. Of course, many snickered at those reports for years. Widespread poverty and unemployment were obvious and no amount of government bluster obscured that reality. People generally understood that economic reports were little more than another propaganda tool.

Here in the U.S., official data is considered more reliable. Americans have been told the economy is getting better since bottoming in 2009. There is some evidence to support this. In particular, real estate prices have made a big recovery due to cheap credit, and the stock markets are back to making new highs. So when officials tell us things are getting better, we have reason to believe them.

But, investors should be careful before suspending all disbelief. The well-paid bureaucrats in Washington have the same powerful incentives to support their government’s narrative as their peers did in Moscow. Continue reading