Unemployment Rate

I am not going to take the time or effort to analyze the unemployment report because its a highly flawed piece of garbage that understates reality. Mish still has fun doing it, so I'll refer you to his site if you want to have a reality check on the unreality. But at least the 5.5% unemployment rate (while highly understated in my book) will cause some shock for those who have been lulled to sleep by "2nd half recovery" talk. If you use old methodology for how unemployment used to be figured before the government started messing with the numbers so the sheep of America would not be alarmed you can see we are well in the low to mid teens (source: ShadowStats.com) and have been there for a LONG time; but we're heading back to recession 2001-2003 levels if you use 'real figures'. (the red line below is the figure offered to the sheep and the pundits, who then relay it back to you as "truth") Again once discouraged workers "give up" and just go home to live with mom and dad (even at age 40/50) they no longer are counted in any government report.



So instead of justifying these faulty numbers, all I am going to do is once a month when this report comes out is to point you to a few old posts (weekend reading for those newer to the blog)

[May 10: Finally Some Mainstream Reporters are Figuring Out the "Spin" from Government]
[Apr 2: The Underemployment Rate is Rising]

I will briefly repeat the same trends we've been talking about since fund inception which continue to be borne out over time

• The # of hours being worked is falling, so even the people not being fired are suffering
• Wage growth continues to fall below (or trend at) government inflation figures - if you used real inflation, then wage growth continues to fall pathetically behind that figure. Which means even those employed are falling behind (this has been happening for a decade now, EVEN using the government inflation figures - much longer if you used real inflation - if not for the house asset bubble this would of been obvious much sooner but people have been borrowing from house ATM to make up the ever growing shortfall)
  
• Our main job drivers, once again, continue to be the federal government and healthcare jobs - woo hoo - both of which drive up costs for all of us as taxpayers or people who need health insurance.
• Do you remember the "jobless recovery' of 2003-2004? Back then when the economy was "recovering" people were wondering why job CREATION was not happening at "typical" recovery rates of previous boom/bust cycles. My theory is we are now seeing the other side of that - just like a lot of jobs were not created in 03, 04 (maybe into 05, I don't recall when the economy began adding jobs at a normal pace) - we are now not losing as many of those jobs... because frankly, they were never created - we've had an undercurrent of unemployment (and underemployment - i.e qualified to do blue collar work but your job was shipped away so you work in Burger King) sitting in the shadows for a long time.
  
• Most blog readers are of "better than average wealth" so maybe much of what I type does not touch them due to their economic condition' but I just want to point out which I have in the past that the median wage in America is under $18. That is about a $37K a year job. And half of Americans are below that. This is why I am so grumpy about the evil tax that is inflation and how the "unprecedented" actions to bail out those at the top and ignore the increase in inflation it helps to propagate. Inflation is corrosive to the bottom half (or more) of Americans - I mean literally we'll have very large numbers of people next winter deciding whether to eat or heat their home in the north. So when I type negative things about the economy at large, I am not talking about life for the upper 25% (mutual fund investors, blog readers) per se, I am talking about the majority of Americans - who would never have the means to invest in a mutual fund.

As I wrote the last time the stimulus plan was first proposed, as things degrade later this year and into early 2009 - we'll have another stimulus plan to prop up the economy - urging Americans to spend money they don't have so Walmart (WMT) can profit. Because in the end Costco and Walmart (and gas stations) seem to be getting all these rebate dollars - and sending it back to their suppliers in China (and Middle East).

So once again, here is the daisy chain. Borrow money from our grandchildren (throw even more debt onto their backs), via borrowing the funds from China via US Treasuries, send these funds to Americans in cute check form - who in turn will use those dollars to spend on oil (which we send the cash to the Middle East) or Walmart/Costco products (which we send the cash to China). And this is our path when stripped down to it's reality. Mark my words - we will repeat it within 6-9 months... so expect another check in the mail. Knock knock China - we need another loan.... can you spare a brother another $200 billion?