Friday, March 4, 2016

Obama says America ‘is pretty darn great’ after jobs report...Any "truth" to his claim?

Jobs numbers came out today and we're touted by the president as evidence that “The facts don’t lie....America is pretty darn great right now.”  Only, I have a small problem with this.  The presidents facts (gathered by the Bureau of Labor Statistics) show nothing of the sort.  Let's take a look.

Below, US full time jobs (also summed by period).  As of August 2015, a new peak in full time employment was achieved above the previous 2007 peak...123.4 million or an additional 200k.  Mission accomplished?!?

But if we contrast the full time job growth against total population growth (and manufacturing job growth)...the picture doesn't look so good.  Below, compare job, population, and manufacturing job growth, by period.

The current period is an absolute anomaly and this means of the 21 million net new Americans since 2007, only one in a hundred found a full time job.  Compare this to previous periods when well in excess of half of new Americans found full time jobs and the economic weakness should not be a surprise.

And below, the job growth cost in terms of net new federal debt growth (per period) vs. the number of net new full time jobs created (per period).

Below, full time job growth vs. the Federal Reserves interest rate cycles.

And why the Fed has been cutting rates (below)...slowing population growth (and the slowing growth in consumption) matched with rate cuts.

The Federal Reserves solution to slowing population growth...make debt cheaper.

Below, full time jobs vs. Russell 3000 (this index measures the performance of 3,000 publicly held US companies based on total market capitalization, which represents approximately 98% of the investable US equity market), and the growth of the Federal Reserve's balance sheet.

The collapse in net new full time job growth over the periods has been offset by federal debt creation (above) and expansion of the Federal Reserves balance sheet (below).  The lack of growth in potential consumers (full time employees) has been offset by growth in federal debt, Fed monetization, and Fed driven ZIRP.  The equity markets have responded to the changed source of "growth" but the recent lack of further QE and rate hikes should have asset holders quaking in their positions.

If full time jobs didn't grow but population did...where did all those people go?  Below, the growth in the "not in labor force", by period.  The growth in "not in labor force" over the past 8 years has been equivalent to the previous 27 years combined. 

"Not in labor force" is defined as persons who are neither employed nor unemployed are not in the labor force. This category includes retired persons, students, those taking care of children or other family members, and others who are neither working nor seeking work.  As of this months jobs report, there are 94.3 million Americans in this categorization (contrasted with the 123 million Americans with full time jobs).  At this pace, the "not in labor force" will be at parity with full time employees sooner than later.

What is even more troubling about the growth in "not in labor force" than its sheer size is that its coming from the worst segments, from an economic growth standpoint.  Consider, from 2000 through 2015, the population of 25-54yr/old American's rose 4.8 million while full time jobs among this segment fell by < -1.2 > million.  So, employment (job skills, savings, consumption, tax receipts, etc.) among the core of the US population has declined for 15yrs+.  Much of the growth in "not in labor force" is coming from the core 25-54yr/old population...the very people the economy is dependent upon for it's present and future vitality.

On the flip side, the population of 55+yr/olds has risen by 23 million and all full time job growth has been among the 11 million older full time employees not retiring (due to insufficient savings, rising health costs, etc.). 

Of course, add in that real wages continue to stagnate and/or fall and the reason US growth continues to slow should be evident.  Doug Short handles this one Here.

The president said that he didn’t expect the unnamed candidates would change their “doomsday rhetoric” but said his plans to grow the economy have worked.  It's hard not to simply call the president a liar, based on a review of President Obama's government data (above).  More broadly, the debate among the current D & R presidential candidates is entirely devoid of fact and lacking any solutions for what ails America.  Based on the current problems we face and the non-solutions provided by both parties candidates...a revolution in thought and government structure seems entirely appropriate and necessary.

For those curious why growth has broken down and why central bankers have taken such an activist role the world over...HERE...and HERE...and HERE