The monthly non-farm payroll report has become a fraud of epic proportions. The Government is claiming that 215k new jobs were created in March. In the goods producing category it claims that 37k jobs were created in construction. But there’s a problem with this – it doesn’t correlate with construction spending and housing starts:
Anyone who follows the housing market knows that for the last year that new housing starts – notwithstanding the conspicuous manipulation embedded in the Government’s reporting methodologies – have been largely driven by multi-family dwellings (big apartment buildings). But the graph on the right shows that multi-family dwelling “starts” have been declining as well.
In other words, the Government would have us believe that 37k jobs in construction were created in March despite the fact that construction spending is in a downturn. It’s laughable. Keep in mind that the Census Bureau collects the data for the employment report, construction spending and housing starts. It’s no surprise that even its own data is inconsistent.
The same idea applies to all of the areas in which the Government is reporting there to be new jobs created except maybe healthcare. Healthcare has indeed been the one area of growth in the economy because Obamacare has triggered a massive increase in Government-backed healthcare spending which is being financed by additional Treasury issuance and a massive transfer of wealth from the middle class to the disadvantaged class and to all of the private companies associated with healthcare (big pharma, hospitals incorporated, insurance, etc).
I turned up the volume – regrettably – on Fox Business this morning after the jobs report because I wanted to get some amusement from listening to the so-called “experts” explain why the economy was supposedly producing an unbelievable number of jobs. Interestingly, Maria “Money Honey” Bartiromo was unable to disguise the look of total disbelief on her face in response to the employment report. Some dope by the name of Steve Moore tried to justify the data by claiming that the big reduction in the cost of gasoline has created higher disposable income for consumers to spend in discretionary areas – he specifically cited restaurants – which has offset the jobs loss in energy and mining.
Unfortunately Steve, where are you getting your views? The facts do not support your thesis. For instance, retailers have been laying off thousands and closing down stores enmasse since the end of December. As you can see from the graph to the left, the restaurant industry, like the retail industry, is shedding jobs hand over fist.
Steve, I would suggest that next time you spew your garbage on a public forum, you better do some fact-checking in case there’s some viewers who know the facts.
Then there’s financial services, which the Government claims added 15k jobs. Tell that to the several thousand who were fired last month from big Wall Street firms. Not sure where the Census Bureau found the 15k new jobs. I suspect that the data collectors turned over some rocks and made up the numbers.
And then there’s the biggest problem. The Government produces several different versions of the employment situation in one report. There’s the Household Survey and the Establishment Survey. Then there’s the U-3 report and the U-6 report, each of which shows substantially different unemployment rates. U-3 shows 5% unemployment and U-6 shows 9.8% unemployment. Which one is it? John Williams of Shadowstats.com has tracked the employment reports for many years. His work shows that the true unemployment rate is well north of 20%. This is validated in the context of the massive number of people who are no longer considered to be part of the labor force.
Most of those close 100 million not in the labor force are the ones who “fell off” unemployment insurance and stopped looking for work. Many are now on welfare of some type. Since 2001, the number of people who “qualify” for Social Security Disability Insurance has more than doubled to nearly 9 million. They are considered not part of the labor force and there’s law firms who have built their practice around getting people qualified. Then there’s the student loan factor. If you can’t find a job, apply to an online university and get a student loan. Since Obama took office the amount of student loans outstanding nearly doubled from $700 billion to $1.3 trillion. Once you get approve for that loan, the Government does not have to count you as being unemployed.
The market response to the employment report is just as absurd as the report itself. The stock and the precious metals were slammed initially. If stocks and metals were hit because the employment report implies that the Fed will raise rates this year, then why has the S&P 500 and Dow rallied to go green on the day and gold and silver are still down $16 and 53 cents respectively?
Corporate revenues are showing no growth and GAAP net income has declined four quarters in a row. I’ve got news for the Government, when companies are not producing revenue growth and their net income declines, they get rid of workers, not hire them.
Gold has been hit for as much as $23 today and silver for 66 cents (over 3%). Currently silver is down about 51 cents to $14.94. The bullion banks have been having a lot of trouble getting silver to cooperate with their manipulative efforts. On many days when gold is being hit, silver will trade higher on the day. I suggested at the beginning of the year that buying silver now would prove to be the trade of the decade. I maintain that call and currently is up over 8% YTD. I would suggest that all sell-offs in silver should be bought. You can leverage your trade in silver with mining stocks.
Courtesy: Investment Research Dynamics
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