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The American Economy RIP

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As I have explained so many times, the 3.5% unemployment rate results from not counting unemployment. If you are unemployed, but have not searched for a job in the last four weeks, your unemployment is not considered to be a fact. If you have looked for a job for a year without success and have become long-term discouraged, you are not even counted as being a member of the work force. So how can you be unemployed?

Job growth is largely a fiction. Increasingly jobs are not jobs. They are gigs. American companies hire through agencies and cycle people in and out as needed. The jobs at which a person worked for decades with medical coverage and a retirement pension are largely gone.

The monthly payroll jobs reports do not translate directly into employment. Many of the jobs are part-time and two or more are held by the same person who struggles to make ends meet. As I have emphasized in my reports for the past two decades, the reported new jobs are in low-pay domestic service occupations -- the kind of labor force India had decades ago.

In the Western world employment for white heterosexual males is hard to come by. In the US the small hiring that takes place after jobs are off-shored and filled by foreigners on work visas is geared toward women, people of color, and those claiming to be trans-gendered.

It seems to me that if a person, despite their obvious gender, can claim to be of the opposite gender, a person can claim to be whatever race he or she thinks, or pretends to think, that they are. It is amazing that white males, who suffer discrimination in the corporate, government, and academic job market, are not claiming to be trans-gendered, trans-race, transsexual-preference black lesbian women.

What American transnational corporations do is to produce wage and salary income, not for Americans, but for the offshore producers of the products that the American firms send back to the US to be sold to Americans who have lost their middle class jobs. Americans are able to buy products devoid of their labor input only by the expansion of consumer debt. The limit to debt is the amount that can be serviced. And that limit has been reached.

Americans now have seven-year auto financing in which the outstanding payments exceed the value of the auto. Trade-ins can only occur because the negative value of the car in relation to the amount owed is rolled into the new loan. You can see where this leads. It is like the Americans who can only make the minimum payment on their credit card balance, thus becoming more indebted monthly by the interest charges on the outstanding balance.

An economy such as America's has nowhere to go but down. Student debt prevents the formation of new households and marriages. This affects real estate sales and home construction, home furnishing sales and appliance sales.

Officially the US has 3.5% unemployment but no real growth in median family income or retail sales.

The US has rigged inflation measures in order to prevent them from measuring inflation. The government's inflation measures were "reformed" by the Boskin Commission. Today if a price goes up in the control basket of goods, the item is thrown out and a lower quality item is substituted in its place, or else the price rise is said to be a "quality improvement" and not counted. This way of measuring inflation makes it possible to have high inflation that does not show up in the inflation measures.

As inflation is under-reported, American GDP can be misrepresented as expanding. This is because nominal GDP must be deflated for inflation. The lower the inflation measure, the higher the real GDP. Thus manipulated inflation measures enhance the perception that US real GDP is on the rise.

What America has is an economy stagnating in debt with a growing amount of consumer income diverted to the service of debt. This is not Trump's fault. It is the fault of corporations moving middle class jobs offshore and filling many that remain in the US with lower paid foreigners on work visas. It is the fault of the Federal Reserve's policy of saving the banks rather than the economy. It is the fault of the policy of supporting aggregate demand by substituting consumer debt for the missing growth in consumer income. This is a huge problem, and a president alone cannot correct it.

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Dr. Roberts was Assistant Secretary of the US Treasury for Economic Policy in the Reagan Administration. He was associate editor and columnist with the Wall Street Journal, columnist for Business Week and the Scripps Howard News Service. He is a contributing editor to Gerald Celente's Trends Journal. He has had numerous university appointments. His books, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is available (more...)

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