Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Apply This Technique to Stop Rushing into Trades - 10th May 21
Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
CHIA Getting Started SSD Crypto Mining by Plotting and Farming on Your Hard Drives Guide - 9th May 21
Yaheetech Mesh Best Cheap Computer /. Gaming Chairs on Amazon Review - 9th May 21
Breaking US Trade Embargo with Cuba - Build 7 Computers in 14 Hours Before Ship Sales Challenge - 9th May 21
Dripcoin Applies New Technology That Provides Faster Order Execution - 9th May 21
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? - 7th May 21
Stock Market Transportation Index Continues To Grind Higher - 7th May 21
SPX Stock Market Correction Arriving or Not? - 7th May 21
How to Invest in an Online Casino? - 7th May 21
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21
Last Chance to GET FREE Money Crypto Mining with Your Desktop PC - 2nd May 21
Will Powell Lull Gold Bulls to Sweet Sleep? - 2nd May 21
Stock Market Enough Consolidation Already! - 2nd May 21
Inflation or Deflation? (Not a silly question…) - 2nd May 21
What Are The Requirements For Applying For A Payday Loan Online? - 2nd May 21
How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part1 - 1st May 21
Are Technicals Pointing to New Gold Price Rally? - 1st May 21
US Dollar Index: Subtle Changes, Remarkable Outcomes - 1st May 21
Stock Market Correction Time Window - 30th Apr 21
Stock Market "Fastest Jump Since 2007": How Leveraged Investors are Courting "Doom" - 30th Apr 21
Three Reasons Why Waiting for "Cheaper Silver" Doesn't Make Cents - 30th Apr 21
Want To Invest In US Real Estate Market But Don’t Have The Down Payment? - 30th Apr 21
King Zuckerberg Tech Companies to Set up their own Governments! - 29th Apr 21
Silver Price Enters Acceleration Phase - 29th Apr 21
Financial Stocks Sector Appears Ready To Run Higher - 29th Apr 21
Stock Market Leverage Reaches New All-Time Highs As The Excess Phase Rally Continues - 29th Apr 21
Get Ready for the Fourth U.S. Central Bank - 29th Apr 21
Gold Mining Stock: Were Upswings Just an Exhausting Sprint? - 29th Apr 21
AI Tech Stocks Lead the Bull Market Charge - 28th Apr 21
AMD Ryzen Overclocking Guide - 5900x, 5950x, 5600x PPT, TDC, EDC, How to Best Settings Beyond PBO - 28th Apr 21
Stocks Bear Market / Crash Indicator - 28th Apr 21
No Upsetting the Apple Cart in Stocks or Gold - 28th Apr 21
Is The Covaids Insanity Actually Getting Worse? - 28th Apr 21
Dogecoin to the Moon! The Signs are Everywhere, but few will Heed them - 28th Apr 21
SPX Indicators Flashing Stock Market Caution - 28th Apr 21
Gold Prices – Don’t Get Too Excited - 28th Apr 21
6 Challenges Contract Managers Face When Handling Contractual Agreements - 28th Apr 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

1.7 Million Reasons Why the Economic Recovery is a Joke

Economics / Economic Recovery Mar 08, 2010 - 04:03 PM GMT

By: Graham_Summers


Best Financial Markets Analysis ArticleMy apologies for dropping off the map last week. I had quite a bit going with the back-end of my business. On that note, I’m going to making a few major announcements in the next week, so stay tuned.

Now, let’s move onto the economy, then the markets.

The bulls have gotten themselves excited about the market blasting off last week from yet another juiced employment record. The headlines read that we only lost 36,000 jobs in February. Of course, this number stems counts an imagined 97,000 new jobs that the BLS claims were created by new businesses. The BLS has no numbers or statistics to back up this claim. It’s just an assumption they made. Do you know anyone who’s launched a business in the last month and is hiring? Me neither.

Let’s imagine these fictitious entrepreneurs. First off we should consider that roughly 33-39% of all start-ups NEVER turn a profit. On top of this, we should consider just who is capable of starting a business that will make significant money in this economy when year over year revenues are down 15-30% for most existing businesses.

Finally, let’s think about the REAL employment impact of these start-ups (assuming they exist). Given the economic backdrop, the soon to be increased health care costs of hiring, as well as the massive drop off in lending coming from the banking sector… what are the odds these would be entrepreneurs (if they exist) are going to be hiring people and expanding their operations?

Next. To. None.

Void of accounting gimmicks, we lost well over 130,000 jobs last month. Real unemployment, when you include people who have fallen off the list because they haven’t looked for a job in the last four weeks as well as those who want full time employment but can’t find it, is 17%. That’s the actual number, not some assumption or fantasy model based on birth/death ratios, seasonal adjustments, or other accounting gimmicks.

Put another way, roughly one in five employable Americans are either unemployed or underemployed: the latter term means you want a full-time job but can’t find one so you’re settling for part-time or temp work. Hard to get the word “recovery” out of the above numbers. “Economic nightmare” seems closer to home.

From a larger perspective, this is the 25th month we’ve posted job losses out of the last 26. Let’s think about that for a moment. We’ve now been losing jobs for over two years. To combat this problem we’ve thrown trillions of dollars at the economy (well, really the banks, but we’ll claim it was aimed at Main Street). And yet, we’re still losing jobs by the hundreds of thousands every month.

Again, where does the word “recovery” apply to this situation?

Beats me. It also probably confuses the 800,000 people who just lost their “imaginary” jobs from April 2008-2009. That’s right, in February the BLS performed a downward revision for its employment statistics for this time period. How big of a revision? 800,000.

In plain terms, accounting gimmicks allowed the BLS to over-state REAL employment numbers by 800,000 jobs from April 2008-March 2009. These “jobs” all just disappeared with the latest downward revision. By the way, lest you think this practice has changed, consider that the same adjustments have added 990,000 to the employment numbers since then.

So all in all, there are 1.7 MILLION imaginary jobs being added to the employment numbers since April 2008. So not only do we find that the various economic policies being employed have failed to stop the job losses… but we’re now discovering that accounting gimmicks allow the Feds to add well over a million imaginary jobs to the employment numbers. That’s a heck of a lot of lipstick to add to a pig of a jobs market.

I realize that the market doesn’t need to trade in line with the economy. But ultimately, earnings and sales come from consumer spending. And regardless of the accounting nonsense that is employed to claim we’re in a recovery, people are still losing their jobs. Those who aren’t losing their jobs are having their work-weeks shortened (the average work week is now 33.8 hours, not 40), or suffering pay cuts.

So to see stocks erupting higher based on Friday’s employment number is beyond a farce. Instead, it is proof positive that our market is now run by algorithmic trading programs: machines that can’t even perform 2nd grade math (or bother analyzing beyond the headline numbers). These stupid programs should be banned from existing.

How will this end? I’ll explain in tomorrow’s essay: Bailout Ben’s 2007 Time Machine. Until then…

Good Investing!

Graham Summers

PS. I’ve put together a FREE Special Report detailing THREE investments that will explode when stocks start to collapse again. I call it Financial Crisis “Round Two” Survival Kit. These investments will not only help to protect your portfolio from the coming carnage, they’ll can also show you enormous profits.

Swing by to pick up a FREE copy today!

Graham Summers: Graham is Senior Market Strategist at OmniSans Research. He is co-editor of Gain, Pains, and Capital, OmniSans Research’s FREE daily e-letter covering the equity, commodity, currency, and real estate markets. 

Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and undervalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.

Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.

    © 2010 Copyright Graham Summers - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

    Graham Summers Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in