April Employment and The Joy of Birth

The headline from Bloomberg states, "U.S. Loses 539,000 Jobs, Fewer Than Forecast, in Sign Economy Stabilizing." After looking through the release, I have just a couple of comments.

First, expectations were for a loss of 600,000 jobs. The better-than-expected result can be attributed to the addition of 72,000 government jobs, with most of those jobs being added at the federal level. This is hardly surprising given the record spending coming out of Washington. It probably took 72,000 people just to spell check the budget. Our ever-expanding federal government is hardly a source of strong future economic growth.

More significantly, the Birth/Death model registered its largest monthly gain of the past 12 months. In the midst of the worst recession since the Great Depression, the government birth/death model has projected that 226,000 jobs were created in April. 76,000 jobs were apparently "born" in the leisure and hospitality sector, despite hotel occupancy rates plummeting. I suppose if we count all of the Craigslist ads for "personal massages" that might make sense. Back all of these assumed jobs out of the total and we're left with a loss of 765,000 jobs in April.

But you won't read about this 765,000 loss because all is right with the world again. The banks are stress-free, consumer confidence is rising, housing is bottoming, we're in a new bull market, and debt and non-performing assets are oh so yesterday.

Disclaimer: The Rubbernecker is once again shorting select U.S. equities.

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The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.

Why There's So Little Outrage

According to the Congressional Budget Office (CBO), the federal government is projected to spend $1.8 trillion more than it takes in this year. Next year, expenses are projected to exceed revenue by another $1.4 trillion. $1.8 trillion is equal to the entire amount of revenue generated by the federal government as recently as 1999. 10 years later, it's equal to the amount we're spending in excess of revenue.

This $1.8 and $1.4 trillion is just the beginning. The CBO estimates that our cumulative deficits will run to over $9 trillion over the next decade. The figures are simply astounding. Where will all of this money come from? It will be borrowed. That borrowed money eventually needs to be repaid.

Let's be clear about this deficit, our debt, and the steady stream of bailouts. These are inter-generational transfers of wealth. We are "saving" and "rescuing" those who have failed in some capacity, and we are expecting our children to pay the cost. For a moment, let's forget about whether these deficits will "work" to strengthen the economy (they won't), and let's forget about the future economic consequences of this massive borrowing binge. Where is the discussion of fairness? Where is our sense of decency? Where is the outrage?!

I suppose it's hard to feel outraged if you can't even quantify the magnitude of the problem.

How Many Millions are in a Trillion? from Econ4U on Vimeo.

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The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.