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No Economy For Americans

By       Message Paul Craig Roberts     Permalink
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Cross-posted from Paul Craig Roberts


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The Dow Jones stock average closed Friday at 17,137, despite the fact that the payroll jobs report was a measly 125,000 new jobs for August, an insufficient amount to keep up with the growth in the working age population.

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The low 125,000 jobs figure is also inconsistent with the Bureau of Economic Analysis' second estimate of second quarter 2014 US GDP growth of 4.2 percent--a figure beyond the capability of the present-day US economy.

Clearly, the economic numbers are out of sync with one another. They are also out of sync with reality.

One of the reasons the stock market average is high is the massive liquidity the Federal Reserve has pumped into the banking system since 2008. Instead of going into consumer inflation, the money went into stock and bond price inflation.

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Another reason for the artificial high stock market is the multi-trillion dollar buy-back of their own stock by US corporations. Many of these corporations have even borrowed from the banks in order to drive up their share prices with heavy purchases, thus maximizing executive bonuses and the values of stock options for board members. In effect, they are looting their own firms by loading the companies with debt in order to drive up executive and board incomes.

The stock market's rise is not because consumer incomes and real retail sales are growing. Real family median incomes have been falling, and real retail sales, at best, are flat.

Let's look at the composition of the pathetic 125,000 new jobs, and then we will examine whether these jobs are real or make-believe. (Keep in mind that payroll jobs include part-time jobs and that the number of payroll jobs is not the number of people employed, because many Americans make ends meet by working two and even three jobs.)

As I have reported for many years, the US economy no longer is capable of creating goods producing jobs. The Bureau of Labor Statistics August payroll jobs report shows zero manufacturing jobs. I read the other day that the US now has four or five times more people on food stamps than in manufacturing jobs.

The jobs of the New Economy are in lowly paid, non-tradable domestic services -- the jobs that characterize a Third World Economy.

Perhaps reflecting the collapse of retail sales, retail trade lost 8,400 jobs in August.

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"Professional and business services" accounted for 47,000 or 38% of August's new jobs. Of these 47,000 new jobs, 49% consisted of "administrative and waste services," largely temporary help services.

"Health care and social assistance" accounted for 42,700 or 34% of the new jobs of which 53% consists of "ambulatory health care services."

Waitresses and bartenders accounted for 21,100 or 17% of the new jobs.

There were 8,000 new government jobs or 6% of the 125,000 new jobs.

That's it. That is the job picture of "the world's only superpower," "the world's largest economy," "the world's richest people." It is the picture of employment in a Third World country.

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http://www.paulcraigroberts.org/

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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