The July Jobs report released by the Bureau of Labor Statistics this past Friday gave us a phony headline number of 255,000 new jobs for the month. Please do not be fooled. The government’s data is obviously skewed for President Obama to tout his truly atrocious recovery, and to prop up his preferred successor Hillary Clinton. Two straight months of oddly high jobs numbers (292,000 in June) will likely continue into the fall in order to catapult the Dems toward a third consecutive White House victory. Essentially, all the BLS gave us last Friday was BS, and trust me, there’s a lot more of it to come with a key election around the corner.
There is overwhelming evidence to prove that the jobs numbers of the previous two months are skewed in favor of the “recovery” narrative. In May, the U.S. Economy added a very laughable 24,000 jobs. The Second Quarter GDP number was also recently released, showing a very anemic 1.2% economic growth for Quarter 2. The government also revised down the previous quarters to 0.8% growth for Quarter 1 of 2016 and just 0.9% for the 4th quarter of 2015. You average that up, and we have had 9 months of economic growth below 1%. Not only that, but President Obama, who’s falsely credited with saving us from depression much like FDR and the catastrophic New Deal, will go down as the only president in history to not reach 3% economic growth once, not once. Even his horrible predecessor managed to reach 3% growth for two or three years. Anyways, the feds urge us to only pay attention to the headline number of each jobs report. Even the markets only react to the main number released each month by the BLS. The rest of the data doesn’t matter they say. Well, when you dive in and analyze the rest of the data, you can see why they’re using the typical liberal rhetoric of “nothing to see here”. All is live and well in the American economy right? The American people are back to work and spending money. Obama saved us from the failing system with his $800 billion stimulus and keynesianism has pulled us out of the Great Recession. The oration above that you get from mainstream economists, liberal TV pundits, and the White House couldn’t be more far from the truth.
When you actually dig into the very superficial July nonfarm payroll numbers, you see a very different story than what Janet Yellen, Barack Obama, Hillary Clinton, and the media want you to see. The major net increases came in leisure and hospitality, which saw 45,000 new jobs, as well as 38,000 new government jobs (sigh), followed by 36,000 in education and healthcare,17,000 in temporary help services, and another 15,000 in retail trade. Now what do all of these lousy jobs have in common? They are all very low paying jobs and most are part time work. Leisure and hospitality are your part time waiters and bartenders, which aren’t very long lasting jobs that contribute to greater economic growth. These are the workers serving the rich and well connected who are doing quite well with all the corporatism, special favors, and easy monetary policy coming out of Washington. Perhaps the biggest facepalm in this report is the 38,000 new public sector jobs. It makes me sick looking at it, I mean literally the last thing this spiralling economy needs is more government jobs. Government workers are not going to produce anything. It’s plain and simple. They’re the reason we have such sluggish growth in the first place. More bureaucrats will only continue to stifle more private innovation, suppress competition in the marketplace, and add more burdensome rules and regulations. More public employees also means more disastrous public works projects that take centuries to finish and suck taxpayers dry. Of course, the rest of us get stuck with the bill because government owns nothing and functions by sticking its corrupt hands in your pockets. Therefore, a bigger payroll at both the state and federal level leaves less and less cash in the hands of who it truly belongs to, where it would be put to use in a much more beneficial way. Imagine if those millions of dollars were saved to start small businesses or invested in companies to purchase technology and machinery instead. Private capital investment and savings is how you get growth, not bureaucracy. Anyways, the bulk of the remaining jobs fall under education, healthcare, temporary services, and retail trade. None of these jobs pay high wages or contribute to the market at all. When you look at higher paying jobs that can actually support a family, contribute to productivity, and benefit consumers, you are given a lethargic 9,000 new manufacturing jobs, 1,700 in wholesale trade, and a net loss of 7,000 mining and logging jobs. This makes sense considering the Obama Administration’s devastating war on coal, but the outcome is throwing thousands of hardworking people into poverty or part time work that cannot provide enough for a family. Not to worry everyone, Miami will not be under water anymore! Give me a break…
Overall, the nonfarm payroll numbers only confirm the fact that our country just isn’t productive anymore. Consumer spending is entirely directed toward imported goods, not those that are produced here at home. Virtually all new employment in this country appears in sectors that aren’t goods producing industries. Think I’m wrong? Adding insult to injury in terms of the awful jobs report that just came out, we also recently got the numbers for 2nd quarter productivity. Professional analysts were looking for a 0.5% increase. Instead, productivity actually declined for a third straight quarter, this time by 0.5%. Here’s the catch… The last time the U.S. had nine consecutive months of declining productivity was in 1979. Must I remind you these were the dreadful Carter years, plagued by economic stagflation and a misery index that was through the roof. Yes, this was the last time we had a three quarter drop in productivity, and for some reason President Obama keeps on bragging about how stupendous his recovery is. When you have an economic situation this grim that it compares to the Carter era, you should probably keep your mouth shut Mr. President. Three appalling quarters of 1% economic growth and the worst productivity decline in almost 40 years show that we have arrived on the doorstep of the next recession, similar to the one that Carter left for Reagan. The problem is that most people are running up debt by borrowing to consume, instead of borrowing money to invest and produce. Stagnant wages and incomes have forced middle income households to resort to their little pieces of plastic in order to fulfill their basic necessities. Savings are at multi-year lows because, well, most middle income families have nothing to save, and there is practically no incentive to save with interest rates so low. They’re very preoccupied keeping up with the rising costs of living while seeing no real rise in income. As a result, we are seeing a middle class and an economy that is under a lot of stress, as millions continue to borrow and go deeper into debt to simply pay their bills.
Every time new economic data comes out, it looks more and more like the day of reckoning is almost here. This entire bubble economy cannot possibly last much longer with credit card, auto, and student loan debt peaking at all time highs. There is absolutely no way that the Fed can put us through three rounds of Quantitative Easing, keeping interest rates at zero, and creating all of this money out of thin air without some major consequences. Alan Greenspan inflated the housing bubble that spawned the 2008 crash by lowering interest rates to 1% for only a few months. Bernanke and Yellen have kept rates at or slightly above 0% for eight years now. All of that malinvestment and cheap money has propped up the stock markets to record highs. Many people are very optimistic about their retirement, but they have no clue what’s really ahead of them. This crash, unfortunately, looks like it will pan out to be a lot worse than the previous one. If the response to this contraction is even more monetary and fiscal stimulus, we’re only pouring more gasoline on the out of control wildfire. Pretty soon the folks up in Washington are going to run out of things to do. Hillary Clinton plans to spend another $1.5 trillion in new government programs, because we all know how well the Obama stimulus worked out for us. The Fed will once again hit the printing press with the false assumption that they’re creating wealth out of thin air. In fact, it would be no surprise to see Yellen jump off the same bridge as Japan and resort to negative interest rates.
Very few politicians and economists in D.C. understand the business cycle and how these bubbles come about. Instead, the Keynesians blame capitalism for these major contractions and use their false narrative to obtain more power and take away more of our economic freedom. Even Alan Greenspan himself, who is basically the architect of this destructive monetary policy, admits his past mistakes and now advocates for a return to the gold standard. What we truly need are free-markets, limited government, and very minimal taxes if any at all. The only true way to cure our economy’s sickness is by sound money and free-trade. We need to allow for the bust to occur without government intervention, instead of continuing to sweep this problem under the rug. The bust of the business cycle is necessary for the economy fully recover. Market forces naturally correct themselves in the form of recessions to get rid of the imbalances created by government, which almost always has to do with cheap credit expansion coming from the central bank. Instead of reacting with the same failed policies, we should solve this problem correctly this time before things get even worse. Slash spending across the board, balance the budget, abolish the unconstitutional bureaucracies, pay down our debts, roll back the burdensome regulations, let interest rates rise to a market level, adopt a simple flat tax or consumption tax, abolish the tax on capital gains, corporations, payrolls and estate, return to a sound gold standard, and let the free-market work its magic. Yes, the banks, auto industry, and other sectors will fail and people will be hurting for a bit, but the recovery will complete itself in no longer than a year or two. America will then be back on the high road toward true prosperity. Just refer yourself to President Harding’s response to the recession of 1920, as well as the actions taken by President Truman after World War II, and even President Reagan’s recovery. They all took a similar approach to one I have laid out. Freer-markets and Adam Smith’s invisible hand will always work better than relying on the greedy hands of central planners who think they know what’s best for everybody. Just ask Ireland and Hong Kong.
By Anthony Licata