Tuesday, 22 October 2013

There are numerous errors in Huffington Post's article on the latest job report


1. The economy has averaged an average of 80,000 jobs per month from July through September (Household Survey) - not the 143,000 claimed in the article.

This is far below the required rate of around 180,000 new jobs per month just to keep up with population growth.

Since June there are an additional 892,000 people of working age, that are not working and are not looking for work, because decent paying jobs are not out there.
This shows the real extent of America's lack of jobs crisis. 

The number of people of working age increased by 616,00 during the same period. 

2. The Federal Reserve's bonds purchases are not boosting borrowing and spending. 

They are being used to bail out insolvent American and European banks.
The money is sitting on banks balance sheets. 
The bond and mortgage debt purchases are free money for the big banks, which they are using to boost their profits by speculation in the markets (which is the reason the stock market is so high).
No additional lending by the banks is happening.
American banks already have $1.7tn of "excess" reserves - they don't need any more for lending.
$1tn of the Fed's QE printing is being used to bail out insolvent European banks. 

The only increase in borrowings that are happening are :-
Government borrowings
Student loan debt (borrowed from the government)
Subsidized car loans

3. Inflation
Real cpi inflation is over 6%, not the 1.5% quoted.
This is well above the 2.1% increase in wages.
We also have to take account of the additional $200bn a year middle class and working poor taxes in the Fiscal Cliff deal.
Real incomes are continuing the steep downward descent that we have seen for the last 5 years.

4. Fed tapering
The reasons that the Federal Reserve held off from tapering their $85bn of printing each month are :-

The dire employment situation, which is worsening not improving
The lack of economic growth

Tapering would result in a stock market crash (there was a mini crash in May when the Fed first hinted at the idea of tapering).
The stock market is currently hugely over valued and in a huge bubble created by the Federal Reserve's massive printing.

This is the Huffington Post article in question
http://www.huffingtonpost.com/2013/10/22/september-jobs-report-unemployment-rate_n_4137842.html

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