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Wednesday, June 17, 2015

The Fed's Gauges (and/or The Fed Itself) Are Entirely Full of It Regarding Employment...Here's Why

Hate to get into name calling but the Fed speak regarding "full employment" is simply ludicrous.  Just peruse the following charts at your leisure to determine for yourself if the US is approaching "full employment"? 

Please add into your consideration that the total population has been growing the whole time so the columns to the right should be getting bigger...not smaller!!!  Unfortunately, the only growth is that of 55+ and 65+ year olds.

And then consider which demographic groups have gained and lost.  All net jobs since '00 have gone to the 55+ set...at the expense of the younger generations who are supposed to fund their unfunded social programs, buy all the assets the old want to liquidate in retirement.

And finally, to make sure there is no "cherry picking" of data, 4 decades of data highlighting jobs creation is falling and the safety nets, like SNAP, are making up the difference.

If this is at or near the top of the cycle, hate to see what comes after our current "full employment" during the next slowdown.

All data for these charts are via Fed's FRED @
http://research.stlouisfed.org/fred2/

3 comments:

  1. Well said! In a recent article written by bond king Bill Gross titled "Going To the Dogs" Gross describes some of the current economic conditions we face. His thoughts strongly dovetail with my concerns as to how these low rates distort and cause massive misallocation of resources throughout the economy.

    The growth in sub-prime auto loans is a glaring confirmation of this and the main reason for surging sales in the auto sector. This effort to offset the dwindling buying power of the public sector by encouraging them to take on more debt by easing terms and artificially low interest rates will not end well. Below is an article that looks deeper into the flaws in this policy.

    http://brucewilds.blogspot.com/2015/03/low-interest-rates-and-unintended.html

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  2. The share of wealth between capital and labour is becoming silly. (Labour is losing.) Thus a crash in bonds and equities is required to restore the balance.

    Our debt based currency, over time, has a flaw / feature that steers wealth towards capital and away from labour.

    Therefore, interest rates will continue to trend lower. Becoming negative. Loan lengths will keep extending. The very richest will double their 'wealth' every few years and the median standard of living will continue to trend down.

    Until..... The financial system seizes up again. Last time, tax payer guarantees and trillions in central bank reserves got things moving again. Next time, the IMF might be able to rescue the financial system. However, at some stage, the paper wealth will be beyond rescue and most of it will burn. Returning value to human labour. Crushing the size and scope of governments. Perhaps even localizing economies rather than globalizing them.

    Returning value to human labour from the financial sector is something to encourage and not to fear. Although, the transition will be painful for anyone relying on the numbers in their 401k.

    Basically, it is common sense. Which is entirely different from common knowledge.

    Thanks Chris for providing information that should be common knowledge. Without the proper common knowledge there will never be an abundance of common sense.

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    Replies
    1. David - thanks for your thoughts and although you are more optimistic than I, I hope you are right.

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