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The State of the Global Markets 2015

Freak-a-nomics and the United States of McDonalds

Politics / US Economy Jun 05, 2011 - 06:35 AM GMT

By: Patrick_Henningsen

Politics

Best Financial Markets Analysis ArticleThis is one of those Freak-a-nomic statistics that, if you were in government, you wouldn’t ever want it to be released to the public, especially during a protracted recession like we are currently witnessing in the US. No would want to admit that the Golden Arches are holding up the American economy.


In a recent report from Market Watch we have learned that:

“McDonald’s ran a big hiring day on April 19 — after the Labor Department’s April survey for the payrolls report was conducted — in which 62,000 jobs were added. That’s not a net number, of course, and seasonal adjustment will reduce the Hamburglar impact on payrolls. (In simpler terms — restaurants always staff up for the summer; the Labor Department makes allowance for this effect.) Morgan Stanley estimates McDonald’s hiring will boost the overall number by 25,000 to 30,000. The Labor Department won’t detail an exact McDonald’s figure — they won’t identify any company they survey — but there will be data in the report to give a rough estimate. There’s a case to be made for the benefit of fast-food restaurant employment, but it’s obviously not the foundation for sustained economic growth.”

SHADOW STATS: Real unemployment in the US is hovering between 15% and 20%.

Based on data available, last month the US economy added only 54,000 jobs, pushing the ‘official’ unemployment rate to 9.1 percent. There are various ways one can look at official unemployment stats, but one thing is certain that in a political world, no administration would want to advertize the true number of unemployed Americans. The definition of what Washington considers to be “unemployed” is a running point of contention. A more realistic and sober account of US unemployment can be seen at archives like Shadow Stats, but it is likely that real unemployment in 2011 stands between 15% and 20%.

So out of those 54,000 new jobs created in the US, burger mogul McDonalds chipped in about 25,000-30,000. According these numbers, roughly half of last month’s US job growth came via the golden arches fast-food chain. And the picture looks even worse if you consider that the majority of these “new job” created by McDonalds were filled by students.

OBAMA VALUE MEAL: Order anything you like... the guy behind you has to pay for it.

Regardless of how compelling or definitive the case may be for raising the economic alarm, President Obama will nonetheless take to the podium at his White House press room just as CEO Ken Lay would take to the podium at his quarterly shareholder meeting for Enron. Both will tell you that everything is going great, better than ever in fact, and implore you to keep investing in their insolent institutions… all this while they are looting any remaining financial reserves and accruing more massive debts. Obama and Lay may be performing their duty as CEO’s but you can be sure that by engaging in data manipulation and creative accounting, neither are delivering any real benefit to their constituents.

It certainly looks like Ronald McDonald has saved Obama’s bacon and cheese once again. But relying on a fast food chain to prop up your economic stats in nothing but Freak-a-nomics, and it is hardly the characteristic of a healthy economy.

Editor Patrick Henningsen

21st Century Wire

© 2011 Copyright Patrick Henningsen - 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.


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