The economy is not getting better despite the announcements emanating from Big Brother. I have written before on how the consumer price index (CPI) is understated by the government statisticians. Well, it shouldn’t shock you to learn that the jobs numbers touted weekly are rigged as well by faulty modeling assumptions. Paul Craig Roberts explains this eloquently below.
Your investments/savings are at risk from these false job numbers. Someday it will be impossible for the government to hide the lack of recovery, investors will panic, and the market will crash again. You need to have your money on the sideline before that happens. An inverted yield curve is a good indicator of an impending recession (http://www.garynorth.com/public/department81.cfm ). Recession ensue typically within five months of an inverted yield curve. The exception was 1966-1967. You should see this to believe it. Click on this link and click “Animate” when ready.
http://stockcharts.com/freecharts/yieldcurve.html
Notice how the yield curve rises in 2006 and then finally inverts in October 30th, 2006 through January 2007. What happened half a year later? You got it. The market topped and the recession followed. The inverted yield curve was a warning to sideline your investments.
Right now the Federal Reserve’s QE2 is attempting to push down short term interest rates. The curve is very steep presently. We must consciously track the yield curve and ignore the blather coming out of the Bureau of Labor Statistics (BLS) on a weekly basis.
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Be seeing you!
(Hat tip Larry S)
More Jobs Mirage
Recently by Paul Craig Roberts: A Government Shutdown Imperils the Power of Congress
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The announcement on March 4 that 192,000 new jobs were created in February was greeted with a sigh of relief. But the number is just more smoke and mirrors, as I will show shortly. First, let’s pretend the jobs are real. What areas of the economy produced the jobs?
According to the Bureau of Labor Statistics, 152,000 of the jobs or 79% are in private services, consisting of: 11,700 jobs in wholesale trade, 22,000 in transportation and warehousing, 36,400 in administration and waste services (of which 15,500 are temporary help services), and 36,200 in ambulatory health care services and nursing and residential care facilities. Entertainment, waitresses and bartenders accounted for 20,000. Repair and maintenance, laundry services, and membership associations accounted for 14,000.
As one who has often reported the monthly payroll jobs breakdown, I am struck by the fact that these categories are the ones that have accounted for job growth for year after year. How can this be? How can Americans, who have had no growth in their real incomes and who are foreclosed from their homes and maxed out on credit card debt, car payments, and student loans, spend more every month in bars and restaurants? How can a few service areas of the economy grow when nothing else is?
The answer is that there were not 192,000 new jobs. Statistician John Williams estimates the reported gain was overstated by about 230,000 jobs. In other words, about 38,000 jobs were lost in February.
There are various reasons that job gains are overstated and losses understated. One is the BLS’s “birth-death model.” This is a way of estimating the net of non-reported new jobs from business start-ups and job losses from business shut-downs. During recessions this model doesn’t work, because the model is based on good times when new jobs always exceed lost jobs. On the “death” side, if a company goes out of business because of recession and, therefore, doesn’t report its payroll, the BLS assumes the previously reported employees are still in place. On the “birth” side, the BLS adds 30,000 jobs to the monthly numbers as an estimate of new start-ups.
Another indication is that despite 10 years of population growth, there are 8 to 9 million fewer Americans employed today than a decade ago.
Some “New Economy” we have. If only we could have the old one back.
March 7, 2011
Paul Craig Roberts [send him mail], a former Assistant Secretary of the US Treasury and former associate editor of the Wall Street Journal, has been reporting shocking cases of prosecutorial abuse for two decades. A new edition of his book, The Tyranny of Good Intentions, co-authored with Lawrence Stratton, a documented account of how Americans lost the protection of law, has been released by Random House.
Link to original article: http://www.lewrockwell.com/roberts/roberts296.html
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