Jobs Report Isn’t Good News as Most Think

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This past Friday, the August jobs report was released by the U.S. Bureau ofLabor Statistics. According to the report, total nonfarm payroll employmentrose by 96,000 in August, and the unemployment rate edged down to 8.1 percent.Specific employment increases were in food services and drinking places, inprofessional and technical services, and in health care.

Almost automatically, proponents of the Obama Administration as well aspolitical pundits touted this as good news and as being proof of theeffectiveness of the President’s economic policy. Unfortunately, few if anypolitical talking heads discussed this in reference to the general citizenry ofAmerica or offer that the aforementioned may not be the case.

If one actually takes the time to read the report and do some basic math,they would clearly see that for the average American, the data does not providesuch a rosy picture. First, is the obvious observation of that 119,000 fewerpersons were employed in August compared to the month of July and thatManufacturing employment edged down in August (-15,000).

The reality is that around 89 million people in America are unemployed andthe value of the dollar has started to retract if one pays any attention to theForex markets. Moreover, Gold is up 3.1 percent and silver is up 7.1 percentwhen the administration and the Federal Reserve are thinking about another phaseof quantitative easing (QE3).

Job loss will continue to be a problem for whoever is in the Whitehouse. Inparticular with the strange policies of the Federal reserve. Bernanke knew in 1988 that quantitative easing was ineffective work because bank lending channeltypically close if banks have access to external sources of funding (otherpeople money). Yet, Bernanke and the present administration continue toadvocate that in order to revive economic growth and avert deflation, QE is anecessity.

The jobs reports show that QE only makes the rich richer. In fact the Fedhas increased its balance sheet from $900 billion to $2.9 trillion thedifference is $2 trillion (or 13% of GDP) while the job report shows that 58%of Jobs Created Pay Only $8 hour or less.

Now I know many will say I am just bashing Obama, that I am jealous of thePresident and that I just don't know what I'm talking about because the jobsreport shows the President is doing a good job.  They may even say thatthe CBO (Congressional Budget Office), as the Presidents often states supportshis economic policies. Unfortunately, on the CBO's track record, I trust themas much as I do a white man with a sheet to have lighter fluid and a match at aBBQ. Let the CBO tell it, from their unrealistic view of this economy, America never goes into a recession. 

Currently,the CBO is assuming a deficit of $3.5 trillion from 2012-2021 and if pasthistory is any indication, they are at least likely off by 60% meaning it isreally close to $10 trillion. Recall that just ten years ago, the CBO predictedthat the US deficit would be at $7.6 trillion currently, but the actual numberas of this week is above the $16 trillion mark. Between 2002 and 2010 all oftheir real GDP projections were between 2.6% and 2.9%. By overestimatinggrowth, you overestimate revenues, which underestimate the deficit and givespoliticians the impression they have more of our money to spend before they getinto trouble.

Last week at the DNC, Obama suggested that he would cut the deficit butstrongly asserted he would use money saved from the wars to reduce the deficit,which is strange since that money doesn’t exist since the war is being paid forby borrowed money mainly from China. All of this seems to be ignored whendiscussing the economy and the jobs picture, but what can one expect, for onlyby American math can you have 119,000 Fewer Employed in August than July and unemployment rate go down.