"Americans are feeling wealthier now, they're borrowing more money now" (Some dope on Good Morning America)There's no doubt the the second part of that statement is true. The latest consumer credit report showed that consumer debt rose substantially in January. The source was primarily credit cards and non-revolving credit - student loans and [Government-subsidized] auto loans. Can't find a job? Enroll at the University of Phoenix and get a robo-stamped student loan. Then the Government can remove you from the labor force statistics and a reduce the number of people not working or in the labor force. The debt to personal income ratio is rising quickly again. It's even worse if you remove Government transfer payments from the personal income LINK. Does it make sense to make that particular adjustment? Yes, because that's taking money from your pocket and giving it to someone who feebly qualifies for Government assistance. We know the Government is borrowing more and more everyday - at an accelerating rate. The Government spending deficit hit an all-time record in February:
The Congressional Budget Office predicts a federal budget deficit of $223 billion for February, 2011, the largest monthly budget deficit ever recorded, according to the Washington Times.We know the BLS payroll is - to be blunt - a complete fraud. But do the manipulated results even make sense? We saw in 2008 and 2009 that several monthly reports would show increases in financial sector and construction workers, despite the fact that Wall Street and the construction/housing market went into a freefall.
What about the numbers being reported to today? To begin with, the birth/death model, which "models" theoretical employment based on estimates of new businesses started vs. new businesses closed. Anyone know anyone who is starting a new business? I know of quite a few who are closing down their businesses, many of them directly correlated with basic economy activity (construction, retail, etc). Today the birth/death "adjustment" added 91k to the payroll report. Does this make any sense?
Let's see the categories where the Government claims there was job growth. Professional and business services added 82,000 jobs in February - BUT just over half of the increase occurred in temporary help services (+45,000). In financial analyst lingo, this is a very low quality statistic in terms of analyzing the strength of the statistic. Hired someone to help you close down your business? We'll call it "jobs gains." But the overall number does not make sense either. We know that on an real inflation-adjusted basis, the economy is declining. This category of jobs represents the "feeder" sector of the economy, which "feeds" off of growth of "host" businesses. I'm sorry, but this number is not reliably justified.
How about "Heath care and social assistance." In this category employment was estimated to have risen by 61,000. In one sense, this does make sense. Per the above Govt record spending deficit, we know that Government spending is hitting new records. Healthcare and social assistance businesses are "private sector businesses" primarily funded by the Government (medicare, medicaid, social security disability, etc). This employment growth, to the extent that it's real, is of very low quality because it requires record spending deficits and record Government debt issuance to sustain. It's not low quality - it's disastrous.
How about the job growth in manufacturing? Is it bona fide and does it make sense? Metal fabrication and transportation jobs added 19k of the 31k BLS-reported jobs. If it's true, this would primarily be from the auto industry, which is being subsidized with Government money, especially the loans and leases financing the "sales." Last month the nationwide dealer inventory hit a new all-time high. These are cars that are shipped from the manufacturer to the dealers but reported as auto sales. The money for financing this inventory and GM and Chrysler is coming from Government supported financing. The cars that do actually get sold to end users are primarily financed with Government subsidized loans and leases.
I think everyone gets the idea with this. Here's the report if you would like to look at the details: LINK
The employment number is not only manipulated to the point outright fraud, but the manipulated results just do not make sense to anyone dissecting them with thought and rationality (which excludes the shit for brains on CNBC).
Now for the biggest and most important question of the month, maybe the year: Where will Peyton Manning end up? Have a great weekend!