Best of the Week
Most Popular
1.Gold And Silver Voodoo Analysis Price Forecasts - Austin_Galt
2.UK Saved From I.S. Threat But Scottish Independence Nightmare is Not Over! - Nadeem_Walayat
3.Silver Price At or Very Close to an Important Low - Clive_Maund
4.Gold And Silver - PetroDollar On Its Deathbed? PMs About To Rally? No - Michael_Noonan
5.Gold and Silver Bear Phase III Dead Ahead - Rambus_Chartology
6.Stock Market Major Selloff Looms - Zeal_LLC
7.Inflate or Die! When Leverage Fails and Market Hope Turns to Fear - Ty_Andros
8.Gold Price Very Close to an Important Low - Clive_Maund
9.Market Forecasts for Stocks, Gold, Silver, Commodities, Financials and Currencies - EWI
10.U.S. Aggression - Will Russia and China Hold Their Fire? - Paul_Craig_Roberts
Last 5 days
Stock Market Wil-e-Coyote Moment May Have Arrived - 1st Oct 14
Europe Teetering the Ddge of a "Japan-style" Deflation - 30th Sept 14
Economists Economic Atonement - 30th Sept 14
Everything You Need to Know About the Stock Market S&P Index Until Christmas - 30th Sept 14
Singapore Becoming Global Gold Hub - Launches Kilo Bar Contract And Gold ATMs - 30th Sept 14
Germany Fights on Two Fronts to Preserve the Eurozone - 30th Sept 14
Turn the Tables on the Gold and Silver Market Manipulators - 30th Sept 14
U.S. 2014 Election Business as Usual - 30th Sept 14
Gold - Time to Buy the Dip? - 30th Sept 14
Urging Investors to Stay Liquid for the Coming Gold Stocks Boom - 30th Sept 14
The Japanese Deflation Myth and the Yen’s Slump - 29th Sept 14
Epic Investor Optimism that Can Be Reversed Only by a Huge Stocks Bear Market - 29th Sept 14
Russia’s Gokhran Buying Gold Bullion In 2014 and Will Buy Palladium In 2015 - 29th Sept 14
The End of Monetary Policy - 29th Sept 14
Here's What Rising Interest Rates Really Do to Your Shares - 29th Sept 14
Is a Credible Stock Market Top Forming? - 29th Sept 14
Silver Price At or Very Close to an Important Low - 29th Sept 14
Gold Price Very Close to an Important Low - 29th Sept 14
Nihilism And The Unknown Future - 29th Sept 14
Stock Market S&P, NAS Change In Trend? None Apparent, But A Caveat - 29th Sept 14
UK Saved From I.S. Threat But Scottish Independence Nightmare is Not Over! - 29th Sept 14
U.S. Aggression - Will Russia and China Hold Their Fire? - 28th Sept 14
Currency Wars and the Death of the Euro - Audio - 28th Sept 14
Obscure Maritime Law Practically “Guarantees” Profits for These Energy Companies - 28th Sept 14
Stock Market Primary IV Underway? - 27th Sept 14
Darwin And The Climate Apocalypse - 27th Sept 14
The Global Middle Class and Copper Consumption, A Stop Spike Event - 27th Sept 14
Can Money Save The Climate? - 27th Sept 14
Gold And Silver - PetroDollar On Its Deathbed? PMs About To Rally? No - 27th Sept 14
Debt and Inflation Consquences of American Fear - 27th Sept 14
U.S. and Global Confidence are in Divergence - So Are Stock Markets - 27th Sept 14
Are U.S. Cars About to Crash? - 27th Sept 14
Why the U.S. Created and Armed ISIS From Libya to Syria - 27th Sept 14
Stock Market vs the Developing Bear Market for Liberal Democracy? - 26th Sept 14
Stock Market Major Selloff Looms - 26th Sept 14
How My Charts Uncovered Two Big Stocks That Are Soaring Like Small Caps - 26th Sept 14
What Cycles Reveal About Stock Market Crash - 26th Sept 14
Gold Not A Safe Haven On Terrorism, Middle East Bombing, Russia ... Yet - 26th Sept 14
Valuing Gold and Turkey Farming - 26th Sept 14
Gold $1200 Underpinned by Physical Demand - 26th Sept 14
Inflate or Die! When Leverage Fails and Market Hope Turns to Fear - 26th Sept 14
Market Forecasts for Stocks, Gold, Silver, Commodities, Financials and Currencies - 26th Sept 14
Gold and Silver Bear Phase III Dead Ahead - 26th Sept 14
The Home Depot Breach Boils Our Blood – and It Should - 26th Sept 14
Why the Pundits are Wrong About Crude Oil Prices - 26th Sept 14
Where’s the Economic Growth? - 26th Sept 14
Stock Market Future Bull - 25th Sept 14
The Specter of Global Debt Default is Once Again Rearing its Head - 25th Sept 14
All Major Market Analysis and Forecasts Investor Open House has Started! - 25th Sept 14
Federal Reserve Policies Cause Booms and Busts - 25th Sept 14
Currency Wars Deepen - Russia, Kazakhstan Buy Very Large 30 Tons Of Gold In August - 25th Sept 14
Strong U.S. Dollar Pressures Gold - 25th Sept 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Most Exciting Event in the History of Technical Analysis

The U.S. Economy is Recovering and Employment is Growing - WHO’S LYING?

Economics / US Economy Dec 13, 2010 - 02:32 PM GMT

By: James_Quinn

Economics Best Financial Markets Analysis ArticleHave you noticed the latest sound bites coming from the punditry in the corporate mainstream media? Here is the latest wisdom flowing from the lying mouthpieces of the ruling oligarchy (Wall Street, Washington DC, Mega-corporations):

The economy is recovering and employment is growing.
Consumers are deleveraging, saving and using cash for purchases.
Retailers are doing fantastic as consumers increase spending.


These are the three themes being proclaimed simultaneously by the mainstream media. Every time I hear these themes proclaimed, I want to shout out like Joe Wilson - "YOU LIE!!!"

How can consumers be deleveraging, saving and increasing spending at the same time? Let's examine the facts to see who is lying.

The fallacy that the economy is recovering and employment is growing can be put to rest by an examination of the BLS data accessed here: ftp://ftp.bls.gov/pub/suppl/empsit.cpseea1.txt.

The number of Americans employed over the last few years is as follows:
  • 2007 - 146.0 million
  • 2008 - 145.5 million
  • 2009 - 139.9 million
  • 2010 - 138.9 million

It seems there are 7.1 million less employed people than there were three years ago. Contrary to the spin from the White House, there are 1 million less people employed today than during the horrific 2009 year. Luckily, another 6 million people left the work force, or we'd really have a problem. The truth is that if the government actually counted everyone in the country who wants a job, the unemployment rate is not 9.8%, but 23% and it continues to rise.

The economic recovery lie can be refuted by examining the data from the BEA located HERE and HERE.

The GDP of the US peaked at $14.5 trillion in the 3rd quarter of 2008. Today it stands at $14.8 trillion, two years later. GDP has gone up for one reason and one reason only - the Federal Government has borrowed trillions from future generations in order to artificially prop up a system already crumbling from the weight of too much debt. Highlights from the GDP calculation are:

  • Private investment is $216 billion lower today than it was in the 3rd quarter of 2008.
  • Exports are $80 billion lower today than they were in the 3rd quarter of 2008.

You may ask yourself how can GDP be higher if private businesses are investing less and exporting less. The answer of course is your friendly neighborhood Feds. The Federal government is spending $128 billion more today than it was in 2008. The last piece to the puzzle is the beloved consumer, who accounts for 70% of GDP. Good old Joe Sixpack has ramped up his spending by a good $470 billion since the 1st quarter of 2009. With this figure, we must be in a strong recovery. Larry Kudlow says so.

A little more digging on the BEA website reveals some interesting data:

  • Personal income has risen by $300 billion since the 1st quarter of 2008.
  • Strangely, private industry wages have DECLINED by $213 billion since the 1st quarter of 2008.

It seems that personal income has risen due to two major items. You will be glad to know that government wages have risen by $58 billion and drum roll please: government entitlement transfers have increased by $523 billion since the 1st quarter of 2008. The Federal government has borrowed hundreds of billions from future generations and paid it out in the form of unemployment benefits and other social programs so that consumers would spend it today. This is how you generate a positive GDP, without generating a real recovery. And, of course, if the government used an honest CPI rate, GDP would still be negative, just as it has been for most of the past decade.

The great consumer deleveraging lie has been ongoing for the last six months. The savings rate has "surged" from 4.8% in the 2nd quarter of 2008 to 5.8% today. The savings rate is calculated as what is left over when you subtract personal consumption expenditures from disposable personal income. The surge in saving is the result of the Federal government borrowing from the Chinese and handing it to consumers to spend. If the government wasn't transferring these funds from future generations to current generations, the savings rate would be 1.2%.

Revolving consumer debt (credit cards) has declined by $173 billion in the last two years. This must mean that consumers are deleveraging.

Total consumer credit peaked at $13.9 trillion in the 1st quarter of 2008 and currently stands at $13.4 trillion. It sure looks like consumer deleveraging. Consumers must have paid off $500 billion of debt. But, the facts obliterate this fallacy. The Wall Street banks have written off in excess of $600 billion since the 1st quarter of 2008, as reported by the Wall Street Journal. This means that consumers are actually charging more on their credit cards than they were in 2008. Having your debt written off, rather than paying it off says much about the great economic recovery of 2010.

The false reports circulating on network news programs is that Americans are paying cash, rather than using credit cards. This is completely false, as both Visa and Mastercard reported increases in transaction volumes in their last quarters. Having worked for a big box retailer, I know that the average credit card transaction is 50% to 70% higher than the average cash transaction. If people were truly charging less, the average ticket at the major retailers would be plunging. Retail sales would be plunging. They are not plunging, as the major US retailers report decent comparable store sales in the 2% to 5% range.

The National Retail Federation has forecast November- December holiday sales will rise by 2.3 percent from a year ago, the most since 2006. A Bloomberg survey taken Dec. 2 to Dec. 8 showed economists raised projections for consumer purchases, the biggest part of the economy, to 2.6 percent for next year, up from their 2.3 percent estimate the prior month.

A little reality check about retail sales is in order. According to the US Census Bureau, total retail sales over the last few years are as follows:

  • 2007 - $4.5 trillion
  • 2008 - $4.4 trillion
  • 2009 - $4.1 trillion
  • 2010 - $4.4 trillion (estimated)

The fact is that there are thousands more retail outlets today than there were in 2007, and total sales are still below the level reached in 2007. Not only that, but even using the government manipulated CPI, inflation has risen 8% since 2007. On an inflation adjusted basis, 2007 retail sales in today's dollars would be $4.9 trillion. Using the real inflation rate of 20% over this time frame would generate an inflation adjusted retail sales figure of $5.4 trillion. As you can see, the great retail recovery of 2010 is a sham. Comparable store sales increases of 3% are inflation adjusted decreases of 5%. If you drive around with your eyes open, you would think the hot new retailer in America is called SPACE AVAILABLE.  

I hate to be a wet blanket during this festive holiday season, but the truth is that there is no self sustaining recovery happening. The powers that be, with the help of their lackeys in the mainstream media are desperately trying to convince you that everything is alright. It is not alright. It is getting worse by the day. The only people spending are Lloyd Blankfein and his ilk, while middle class Americans sink further into despair and debt.

Who's lying? You know.

     RULING ELITE

      MIDDLE CLASS

Join me at www.TheBurningPlatform.com to discuss truth and the future of our country.

By James Quinn

quinnadvisors@comcast.net

James Quinn is a senior director of strategic planning for a major university. James has held financial positions with a retailer, homebuilder and university in his 22-year career. Those positions included treasurer, controller, and head of strategic planning. He is married with three boys and is writing these articles because he cares about their future. He earned a BS in accounting from Drexel University and an MBA from Villanova University. He is a certified public accountant and a certified cash manager.

These articles reflect the personal views of James Quinn. They do not necessarily represent the views of his employer, and are not sponsored or endorsed by his employer.

© 2010 Copyright James Quinn - 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.

James Quinn Archive

© 2005-2014 http://www.MarketOracle.co.uk - 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

Free Report - Financial Markets 2014