So. According to ADP the US economy created 208,000 jobs last month. That number is decidedly dreadful. Yes, I realize that compared to the 100,000’s we were seeing last year and through most of the recover it’s… better? But seriously folks, its dreadful and everyone knows it.
The DOW Jones closed last night at 17,912. That’s high. Extremely high. Record high even. S&P is up. DOW is up. Stocks are up. Yet, no business is really expanding, nobody is really hiring? Why is that? How can we have everything supposedly gaining value, yet absolutely nothing to show for it?
Well the US government spent 4.5 trillion dollars over the last few years in a program called Quantitative Easing. See that is where the Federal Reserve uses a lot of money to introduce liquidity into the market so that banks will lend more, forcing rates down. It also allows there to be more money in the market, meaning the prices of stocks and bonds go up. Hence our stock market boom, while we have a jobs… not boom.
For instance take a look at the graph at the top to see just how much the Fed now owns of Treasury backed securities and Mortgage securities. Notice that red line was 0 up until QE started. That’s because the government (read taxpayers) are now on the hook for those when it all goes tits up.
But business are making money, they are sitting on something over a trillion dollars of cash right? Why not just use it? Well a lot of that money is overseas. If they bring it home they have to pay 35% or more taxes on it. To do that would just be bad business. (More pressure for that Fair Tax.)
So we sit with no true economic growth. Now why aren’t businesses expanding. Because the economy doesn’t feel right. Something is off and business knows it. If you own a business are you going to expand right now? What with the cost of new employees these days? Do you really feel safe putting your money out there?
So some people are mildly happy that we beat 150,000 we need to outpace population growth.. Woohoo!.. only there are 93,000,000 people out of work. So some math here tells us at this rate, 93mil/50thou gives us around 1850 months till we have full employment again. Or at least enough jobs to offer full employment.
Yup. That sounds like a great recovery winning plan right there.
Oh and those 5 million illegal asshats the President wants to make legal are going to want jobs as well. So there is that.
Well, I assume they will want jobs, that’s what we’re told anyway, but welfare and food stamps seems a much more likely outcome.