The Bureau of Labor Statistics reported Friday morning that the U.S. unemployment rate is now 7.6% percent, with 175,000 new jobs created in May. At the same time, the Bureau revised its April numbers down, saying 149,000 jobs were created in April, and not the initial 165,000 it reported.
The unemployment situation in the U.S. in May was essentially the same as in April. (I wonder how the Federal Reserve looks at this. Does it say, "Wow, imagine what would have happened to the jobs market in May if you didn't create $85.0 billion in new money during the month"?)
My readers know I don't care much for the "official" unemployment numbers we get from the government statistics office. I believe the official rate doesn't show the real picture, because it does not include people who have given up looking for work in the jobs market and people who want full-time jobs but can only find part-time jobs.
When we take into consideration these two important figures that the official numbers leave out, the underemployment rate, as it is referred to, was 13.8% in May- it's been hovering around 14% for years now.
A startling 7.9 million Americans are working part-time, because they can't find full-time work in today's jobs market.
In total, there are still some 12 million people in the U.S. jobs market looking for work. What's most troubling is that 37.3% of them have been unemployed for more than six months! The longer they stay out of the jobs market, the more difficulties these people will face in finding jobs as their skills become obsolete.
Looking closer at May's jobs market report (which I feel was an all-round terrible report), new employment in industries like mining and logging, construction, manufacturing, wholesale trade, transportation and warehousing, and financial activities witnessed next to no change in May.
Yes, the growth in the jobs market is in low-paying retail and service positions. We have college graduates working jobs that pay minimum wage.
Dear reader, there is something definitely wrong with this economic recovery. The government has increased its national debt by $17.0 trillion, and the Federal Reserve's balance sheet has grown to $3.0 trillion… and we still can't get create jobs.
This so-called economic recovery smells funny to me. Maybe the recovery doesn't even exist. Take out the sucker's rally in the stock market, and there really isn't much left to the economy.
Michael's Personal Notes:
How can consumer spending in the U.S. economy rise under these circumstances…
In the first quarter of 2013, hourly compensation of Americans employed in non-farm businesses fell 3.8%. This was the biggest drop since the Bureau of Labor Statistic started to measure this statistic in 1947. (Source: Bureau of Labor Statistics, June 5, 2013.)
Consumer spending is not rising as one would expect in a real economic recovery. In fact, real personal consumption expenditures (excluding food and energy) adjusted for price changes rose less than 1% in the first four months of 2013! (Source: Federal Reserve Bank of St. Louis web site, last accessed June 6, 2013.)
And inventories of businesses in the U.S. economy also paint a grim picture of consumer spending. In March, manufacturing and trade inventories stood at $1.64 trillion, up five percent from March 2012. (Source: Ibid.) In an improving economy, like the one that the majority of media outlets and politicians tell us we are in, business inventories are supposed to decline-not rise!
No, businesses building up inventories are not a good sign.
But in spite of the pressures on consumer spending, the stock prices of companies in the consumer "discretionary" sector-that's businesses that sell nonessential goods-continue to rise.
Take a look at the chart below of the Consumer Discretionary Select Sector SPDR (XLY) exchange-traded fund (ETF) to get an idea of what's happened to the stock prices of companies that sell discretionary nonessential items to consumers.
Let's call a spade a spade: the above chart is not an indication that consumer spending is rising. It's a chart that simply shows that the stock prices of companies that sell consumers nonessential items are rising because investors are bidding up these stocks.
Don't let the stock market falsely tell you consumer spending in the U.S. economy is improving and that businesses are doing great, because that's simply not the case! The reality is that the opposite is happening.
Looking at the health of the U.S. economy, it is very, very weak. This is the weakest economic recovery following a recession I have ever lived through-I believe many Americans would agree with me.
Spending by U.S. consumers makes up more than two-thirds of the U.S. gross domestic product (GDP). If consumer spending isn't increasing, we can't have a real economic recovery; it's that simple, regardless of what rising stock prices may allude to.