The col­laps­ing US econ­omy

The Pak Banker - - OPINION - Paul Craig Roberts

Do you re­mem­ber when real re­porters ex­isted? Those were the days be­fore the Clin­ton regime con­cen­trated the media into a few hands and turned the media into a Min­istry of Pro­pa­ganda, a tool of Big Brother. The false re­al­ity in which Amer­i­cans live ex­tends into eco­nomic life. Last Fri­day's em­ploy­ment re­port was a con­tin­u­a­tion of a long string of bad news spun into good news.

The media re­peats two num­bers as if they mean some­thing - the monthly pay­roll jobs gains and the un­em­ploy­ment rate - and ig­nores the num­bers that show the con­tin­u­ing multi-year de­cline in em­ploy­ment op­por­tu­ni­ties while the econ­omy is al­legedly re­cov­er­ing. The so-called re­cov­ery is based on the U.3 mea­sure of the un­em­ploy­ment rate. This mea­sure does not in­clude any un­em­ployed per­son who has be­come dis­cour­aged from the in­abil­ity to find a job and has not looked for a job in four weeks. The U.3 mea­sure of un­em­ploy­ment only in­cludes the still hope­ful who think they will find a job.

The gov­ern­ment has a sec­ond of­fi­cial mea­sure of un­em­ploy­ment, U.6. This mea­sure, sel­dom re­ported, in­cludes among the un­em­ployed those who have been dis­cour­aged for less than one year. This of­fi­cial mea­sure is dou­ble the 5.3 per­cent U.3 mea­sure. What does it mean that the un­em­ploy­ment rate is over 10 per­cent af­ter six years of al­leged eco- nomic re­cov­ery?

In 1994 the Clin­ton regime stopped count­ing long-term dis­cour­aged work­ers as un­em­ployed. Clin­ton wanted his econ­omy to look bet­ter than Rea­gan's, so he ceased count­ing the long-term dis­cour­aged work­ers that were part of Rea­gan's un­em­ploy­ment rate. John Wil­liams (shad­ow­ con­tin­ues to mea­sure the long-term dis­cour­aged with the of­fi­cial method­ol­ogy of that time, and when these un­em­ployed are in­cluded, the US rate of un­em­ploy­ment as of July 2015 is 23 per­cent, sev­eral times higher than dur­ing the re­ces­sion with which Fed chair­man Paul Vol­cker greeted the Rea­gan pres­i­dency.

An un­em­ploy­ment rate of 23 per­cent gives eco­nomic re­cov­ery a new mean­ing. It has been eighty-five years since the Great De­pres­sion, and the US econ­omy is in eco­nomic re­cov­ery with an un­em­ploy­ment rate close to that of the Great De­pres­sion.

The labour force par­tic­i­pa­tion rate has de­clined over the 're­cov­ery' that al­legedly be­gan in June 2009 and con­tin­ues to­day. This is highly un­usual. Nor­mally, as an econ­omy re­cov­ers jobs re­bound, and peo­ple flock into the labour force. Based on what he was told by his eco­nomic ad­vis­ers, Pres­i­dent Obama at­trib­uted the de­cline in the par­tic­i­pa­tion rate to baby boomers tak­ing re­tire­ment. In ac­tual fact, over the so-called re­cov­ery, job growth has been pri­mar­ily among those 55 years of age and older. For ex­am­ple, all of the July pay­roll jobs gains were ac­counted for by those 55 and older. Those Amer­i­cans of prime work­ing age (25 to 54 years old) lost 131,000 jobs in July.

Over the pre­vi­ous year (July 2014 - July 2015), those in the age group 55 and older gained 1,554,000 jobs. Youth, 16-18 and 2024, lost 887,000 and 489,000 jobs.

To­day there are 4,000,000 fewer jobs for Amer­i­cans aged 25 to 54 than in De­cem­ber 2007. From 2009 to 2013, Amer­i­cans in this age group were down 6,000,000 jobs. Those years of al­leged eco­nomic re­cov­ery ap­par­ently by­passed Amer­i­cans of prime work­ing age.

As of July 2015, the US has 27,265,000 peo­ple with part-time jobs, of whom 6,300,000 or 23 per­cent are work­ing part-time be­cause they can­not find full time jobs. There are 7,124,000 Amer­i­cans who hold mul­ti­ple part-time jobs in or­der to make ends meet, an in­crease of 337,000 from a year ago. The young can­not form house­holds on the ba­sis of part-time jobs, but re­tirees take these jobs in or­der to pro­vide the miss­ing in­come on their sav­ings from the Fed­eral Re­serve's zero in­ter­est rate pol­icy, which is keyed to­ward sup­port­ing the bal­ance sheets of a hand­ful of gi­ant banks, whose ex­ec­u­tives con­trol the US Trea­sury and Fed­eral Re­serve. The most lu­cra­tive jobs in Amer­ica in­volve run­ning Wall Street scams, lob­by­ing for pri­vate in­ter­est groups, for which for­mer mem­bers of the House, Se­nate, and ex­ec­u­tive branch are pre­ferred, and pro­duc­ing schemes for the en­rich­ment of think­tank donors, which, mas­querad­ing as public pol­icy, can be­come law. Clearly, this is not an econ­omy that has a fu­ture.

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