America's Fiscal Cliff
America's declining economy is getting weaker.
by Stephen Lendman
America's weak economy shows further deterioration. According to former Fed Governor Kevin Warsh, "(t)he fiscal cliff in early 2013 - when the government stimulus spending and tax relief are set to fall - is not misfortune. It is the inevitable result of policies that kick the can down the road."
In other words, chickens inevitably come home to roost. Reckless money printing, free lunch handouts to corporate favorites and rich elites, and other policies favoring super-rich Americans won't last forever. When the music stops, watch out.
The latest jobs report perhaps warns what's coming. Characterized by some as bad Friday, it was much worse than reported. It suggests trouble ahead, perhaps by late spring or summer.
The Labor Department reported 120,000 new jobs. Its web site says "The confidence level for the monthly change in total employment is on the order of plus or minus 430,000 jobs."
BLS so manipulates data, place no confidence whatever in its reports. In good times, employment growth may be understated. During Main Street Depression conditions, it's mirror opposite.
Moreover, the so-called "birth-death model" distorts reality. It reflects estimated net non-reported jobs from new businesses minus losses from others no longer operating.
During expansions, it works because start-ups exceed shut-downs. During economic weakness, it fails. Yet BLS assumes employees from non-operating companies still work. In addition, around 48,000 monthly jobs are added whether or not new companies exist. Removing them drops Friday's number close to 70,000, but it's worse than that.
Weakness showed up across the board. Over 160,000 stopped looking for work. Around 90% of the fastest growing job areas are low-pay service ones. Most are part-time or temp. High-pay full-time jobs are becoming an endangered species. Economies can't grow and prosper that way.
America's been declining for years. It's heading for third world status, and planned domestic spending budget cuts promise worse times ahead. Bipartisan complicity assures it. Most reductions take effect post-election and continue incrementally for years. Others not yet enacted will follow.
America's social safety net's on the chopping block for elimination. It includes Medicare, Medicaid and Social Security, as well as other vital supports like food stamps.
The April 6 jobs report was revealing. Employment and participation rates dipped. The work week declined. So did the aggregate number of hours worked. It's a proxy for output. It fell for the first time in seven months.
Moreover, fewer hours and tepid wage gains caused a 0.1% drop in weekly earnings at a time gasoline prices are rising and household incomes are squeezed. Reduced consumption follows. Retailers anticipate the crunch. They cut 33,800 jobs after 28,600 the prior month.
Hiring intentions are down. Year-over-year, they collapsed 8.8%. The diffusion index fell. Weak data suggest sluggishness and decline. For three consecutive months, the ISM/inventories ratio fell.