If You Thought You Were Left Behind, You Have A lot of Company
These days it appears the U.S. is looking to stoke Forever War fervor.
“We’re doing it at what’s looking more and more like a critical turning point for the economy. We’ve already discussed how long and how weak this ‘recovery’ from the Great Recession is,” wrote David Stockman to subscribers, June 21, 2019.
Stockman went on to say, Now we have solid evidence this run is nearing its end. That’s the Bureau of Labor Statistics’ employment situation report for May 2019.
The labor market has stalled. That’s effectively stalling speed in the labor market, which has been the last bastion of the Trump/Wall Street delusion that the main street economy is strong as an ox.
It wasn’t just the punk 75,000 new jobs. There was a 75,000 downward revision to the prior two months.
The model the Bureau of Labor Statistics builds in a heavy “momentum” factor due to the birth/death factor and other statistical techniques. So, it takes a while to “catch up” to reality. That’s what these revisions are about. It’s the kind of stuff that happens at big turning points.
For instance, the final jobs numbers for the worst six months of the Great Recession came in five years after the fact.
Once the BLS finally reconciled its “establishment survey” of the jobs market to the actual payroll records of millions of U.S. businesses, large and small, the difference between the BLS “model” as initially reported and real-world tax-paying business records were nearly a negative 600,000 per month.
That 75,000 gain is likely to be revised downward. It already looks “down” compared to the 151,000 three-month moving average… the 175,000 six-month average gain… and the 196,000 12-month average.
Moreover, the annualized change in full-time employment has decelerated at a startling pace since November.
The year-over-year gain in full-time employment (reported in December 2018) posted at 3.1 million just six months ago.
As of May 2019, the gain has plunged to just 1.07 million. In effect, two-thirds of the momentum in full-time jobs growth has vanished since Halloween opined Stockman, former Director of the Office of Management and Budget.
Is it the “Best Economy, Maybe Ever”? Or is something else unfolding? We’ve seen 29 monthly employment situation reports on his watch. And the average gain is just 195,000. That compares to 220,000 over Barack Obama’s last 29 reports.
The current administration has fixed exactly nothing. In all honesty, there’s no MAGA going on. Even the alleged best year during this recovery for real gross domestic product (GDP) growth, 2018, is nothing more than a statistical trick.
We’ve seen a handful of spells during this “recovery” amid which real GDP growth hovered around 3%. But they didn’t last under President Obama. And they’re proving no different under President Trump.
Indeed, with the second quarter nearly in the books, the New York Fed’s “Nowcast” projects annualized GDP growth of just 1.39% for the three months ending June 30.
The economy is stalling, fast. And that’s before the full impact of new tariffs and the Trade War. And if the 1930 Smoot-Haley Trade Act that was intended to protect American farmers is any example, the future is likely to get very ugly. No one can see the future. But you don’t need to see the future to prepare for it.
Real wages for most American workers have hardly increased in decades, the Pew Research found last year. After accounting for inflation, today’s real average wage has “about the same purchasing power it did 40 years ago.” At the same time the unemployment rate remained at a 49 year low of 3.6% in May, wage growth has slowed. “Although the average wage paid to American workers rose 6 cents to $27.83 an hour in May, the increase over the past 12 months slowed to 3.1% from 3.2% after peaking at 3.4% earlier this year,” according to Msn Money, June 26, 2019.
Act as if the Great Depression II is in the cards. When prices drop cash is indeed king. We can also learn from the Great Depression that on a per capita basis, more Americans became millionaires than any other time in history. Spring always follows winter. No matter the calendar, weather the winter by limiting your losses so you can look forward to spring. Spring always follows winter.
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