Patriot I really like the caveman graphic
Refutation of Economic Illusion
Friday July 05, 2013 15:46
As a general rule, the most successful man in life is the man who has the best information
Illusions trick us into perceiving something different than what actually exists and the mainstream media is very good at creating them. Currently they have the herd convinced there is an economic recovery underway.
We all need to understand that to have a real and sustainable recovery for an economy that relies on consumer spending for 70 percent of its activity we need to have a jobs recovery.
Okun’s Law holds that an economy, its GDP, must grow above its potential to reduce the unemployment rate. Year-on-year economic growth of two percent above the trend (considered to be 2–3 percent) is needed to lower unemployment by one point.
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A third downgrade of U.S. economic growth for the first quarter 2013 showed the country’s GDP grew at just a 1.8 percent annualized pace.
Bloomberg and IHS Global Insight estimate the U.S. economy will grow by 1.6 percent this year.
Industrial production was unchanged in May, the second straight weak monthly report. Capacity utilization – a measure of how fully the nation's mines, factories and utilities are deploying their resources – fell to 77.6 percent, well below the average of 80.2 percent experienced from 1972-2012.
The Commerce Department revised growth in private investment to 7.4 percent in the first quarter, down from its original estimate of 12.3 percent.
Imports were originally reported as growing by 5.4 percent but the revised number is now 0.4 percent.
Sequestration – what remains of the ‘fiscal cliff’ after the U.S. Congress passed the American Taxpayer Relief Act - could trim economic growth in 2013 by 0.6 percentage points by cutting $85 billion worth of Federal government spending this year. Over its ten year life sequestration will cut $600 billion of government spending from the economy.
“The drop in growth rate is not temporary, but over the span of at least 10 years in which the sequestration will take effect. And its impact will be more strongly felt in later years, once the fiscal sequestration translates through its negative multiplier effects.” Benjarong Suwankiri, ‘After Fiscal Cliff, Sequestration’ nationmultimedia.com
Hourly pay for U.S. nonfarm workers fell a record 3.8 percent annualized in the first quarter, the largest decline since records started being kept in 1947. This record first quarter decline was on top of the 2012 third weakest annual increase in hourly pay since 1947. Hourly worker pay rose only 1.9 percent in 2012, barely keeping up with the 1.8 percent gain in the fudged downward and much maligned consumer price index.
The growth rate of consumer spending was revised downward to 2.6 percent annualized in the first quarter from an earlier estimate of 3.4 percent.
The labor force participation rate is the percentage of working-age persons in an economy who:
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Are employed
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Are unemployed but looking for a job
“Working-age persons" is defined as most people between the ages of 16-64. Excluded are students, homemakers, and people under the age of 64 who are retired.
According to the Bureau of Labor Statistics the labor force participation rate dropped 0.2 percentage points to 63.3 percent. This is the lowest rate in 34 years.
Considering population growth in the U.S. is positive and is one of the highest rates in developed countries, you’d think labor force participation would be growing, not dropping. The U.S. economy needs to add 150,000 to 250,000 jobs per month just to absorb the workforce's new entrants never mind make up for what’s been lost since the Great Recession.
“February's headline unemployment rate was portrayed as 7.7%, down from 7.9% in January. The dip was accompanied by huzzahs in the news media claiming the improvement to be "outstanding" and "amazing." But if you account for the people who are excluded from that number—such as "discouraged workers" no longer looking for a job, involuntary part-time workers and others who are "marginally attached" to the labor force—then the real unemployment rate is somewhere between 14% and 15%.” Mortimer Zuckerman, ‘The Great Recession Has Been Followed by the Grand Illusion,’ wsj.com
U.S. labor force participation is now down to where it was in 1979. The unprecedented 2.5 percentage point decline in labor force participation under President Obama amounts to 6.2 million Americans being pushed out of the job market - 6,200,000 have stopped looking for work, these people have been forced to give up.
Many of the jobs that are being created are part-time low wage second or third jobs going to those already working. The average work week is now a very short 34.5 hours because employers are shortening workers' hours or asking employees to take unpaid leave.
“The financial crisis destroyed some $16 trillion in household wealth. Americans have only recovered 45 percent of that amount…But when you break down that wealth recovery by income level, it gets worse. The Fed estimates that 62 percent of that wealth people have regained since the depths of the recession has come in the form of higher stock prices. And 80 percent of stock wealth is held by people in the top 10 percent of the income distribution.” Erika Eichelberger, ‘Sorry, There's Been No Economic Recovery for Poor and Minority Households’
Here’s a few facts:
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Medium household income has declined. Adjusted for inflation household incomes are now back to levels last seen in the 1990s - average per capita wage is around $26,000, household median income is at $50,000
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Few Americans own any significant amount of financial wealth. The bottom 80 percent of Americans hold roughly 5 to 8 percent of all financial wealth (non-housing related)
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U.S. Employment rate is not recovering, one in 12 Americans are jobless
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The number of Americans living in poverty has now reached a level not seen since the 1960s. There are 50 million poor people in America. There are more than 146 million Americans considered either poor or low income
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There are over 47 million Americans on food stamps
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The banking system backs $7.4 trillion in insured deposits with $32 billion, that’s just .43 percent
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1 out of 3 Americans have no savings
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Nearly half of American’s die broke
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There are less Americans working manufacturing jobs today than in 1950 even though the country’s population has doubled
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The U.S. has run a trade deficit with the rest of the world of more than 8 trillion dollars since 1975
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The U.S. Social Security system is facing a 134 trillion dollar shortfall over the next 75 years