In the last several days we have seen these economic news items out of the US. This from the Sydney Morning Herald on the 8th:

The Australian dollar is lower after very strong US economic growth figures … [my emphasis]

The US economy grew by 2.8 per cent in the 12 months to September, much stronger than the 1.9 per cent analysts were expecting.

That sounds like pretty good growth in the context of the last 5 years. It even seems to be better than Australia is doing right now.

And then later on Friday, this straight from the US Government BLS news release:

Total nonfarm payroll employment rose by 204,000 in October, and the unemployment rate was little changed at 7.3 percent, the U.S. Bureau of Labor Statistics reported today.

The optimism biased Bloomberg reported this this way:

Employers added 204,000 workers in October, according to the Labor Department report, compared with a median estimate of a 120,000 gain in a Bloomberg survey of economists.

One conclusion we could draw from the above is that “analysts” and “economists” haven’t a clue what’s going on and their estimates and forecasts are next to useless … but I digress.

The headline 204,000 “new jobs” comes from one of two monthly surveys conducted by the BLS to measure the labour force and employment in the US. This one is a count of jobs taken from a survey of employers, regardless of hours worked. In this survey method, a worker with 2 jobs will get counted twice; one with 3 jobs, three times. In a world where part time work is becoming more prevalent, surely this data is suspect … But it’s the headline news!

The second survey counts people. Ah, that sounds intuitively better, doesn’t it.

So what does the BLS’s so called “Household Data” survey tell us? (Actually the October data looks a bit dodgy to me, but let’s run with it, straight off the BLS website).

In the year to October 2013:

• The population of civilians of working age (excludes: military, prisoners, kids under 16, folk in aged care institutions) rose 2.4 million to 246.4 million. (This increase seems high to me, given the growth rate of total population – now 317 million – but I’ll plow on.)
• But, the number of the people employed rose only 240,000 to 143.6 million.

What? … only 10% of the people who added to the working age population found work? Doesn’t sound like solid, broad-based economic growth to me. Meanwhile …

• The number “unemployed” fell 976,000 to 11.3 million. (The unemployed does not include anyone who has done any work at all in the survey week, or anyone who has not looked for work in the prior 4 weeks.)

But hey, the number counted as unemployed fell by a million in a year. That must be good news. But what about this:

• The number “Not in labor force” (in BLS parlance), rose over 3.1 million to over 91.5 million.

And there’s a problem. A huge increase in the number of people that do not work, dependent on the barely increasing number of people that do. That’s a trend. It’s a trend that doesn’t seem to be reversing. It’s a trend that will start to hurt more and more: socially and politically.

Printing money and handing it to bankers, won’t fix it: they just play in the casino. The Fed is pushing on a string, trying to drive unemployment down and employment up. $1 trillion printed in the last year appears to have helped increase employment by just 240,000. Pretty poor return on a mountain of new money.

Political rhetoric won’t fix it either. “We must get back to work!” “We will create more jobs!” are just slogans. What is the work these unemployed and disengaged people can productively do? And who is going to pay them?

But let’s go back to the increase in GDP of 2.8%. If that is correct, where did the benefits of that flow? Based on this data, very little of it to the 155 million US work force and their dependents. Most of must have flowed to the financial engineers, the money men, the 1%.

More soon …