Scary Reasons Not to Get Giddy over the Monthly Jobs Reports

May 9, 2013 –

News reports on unemployment claims haven’t only misleading, they’re dangerously ill-omened. They fail to report what’s really happening.

Curiously, the news media conveys optimistic stories, and Wall Street investors and others are jubilant over the 4.9 percent unemployment rate that was alleged by the government in Feb. 2016.

Why? Countless Americans can’t find family wage jobs. But misleading news headlines trumpeted the meager creation of jobs instead of the sad reasons for the mediocre report.

No one appears motivated to dig deep enough. As a credentialed journalist, I’m also a business-performance consultant. I remain skeptical about the federal government’s policies because I experience firsthand the trials and tribulations of entrepreneurs and their Main Street customers.

Under-reported issues

Month after month, it’s forecast the average American workweek will remain less than 35  hours (see the Economic Forecasts page).

The big-ticket sellers who need adequate numbers of credit-worthy customers in order to be profitable are finding it a big challenge. Actually, the negative trend was well underway at least a year before the National Bureau of Economic Research’s official declaration of the recession.

“We hope that you are enjoying having your children graduate from college and come home to live in your basements.”

-Lewis Woodhill

Red flags were everywhere — from auto dealers launching bad-credit sales departments — to the skyrocketing student-loan defaults and complaints about Sallie Mae’s questionable practices. More than 35 percent of American consumers are past due on their bills must cope with debt collectors.

Seemingly, everyone involved in Main Street business was deeply challenged, and remains a reason why this portal has more than 150 public-policy articles and an Op Ed Economic Analysis page that explain the issues.

But you don’t have to be a business consultant to understand the problems and solutions. For example, the accurate big picture about the economy and jobs was exposed in an article on RealClearPolitics. Citing government data, it was authored by Louis Woodhill — a successful engineer, software entrepreneur, and a Forbes contributor.

He points out the “BLS Establishment Survey, which reported that 165,000 payroll jobs had been created during April 2013, the Household Survey” numbers told a much different story.

Realistically, nothing has improved.

Too-few family wage jobs

Mr. Woodhill wrote: “Total employment rose by 293,000 during April, but part-time jobs increased by 441,000. As a result, full-time jobs declined by 148,000.”

He further stated the number of full-time jobs only increased by 73,000. That, of course, means this “was not enough to keep pace with the growth of our working-age population, so the ‘FTE jobs ratio’ (the number of FTE jobs per 100 working-age Americans), fell according to Mr. Woodhill.

This gives us threatening information about the nation’s recovery.

“The April jobs numbers describe a mass replacement of full-time workers with part-time employees, coupled with a fall in the length of the average workweek,” he wrote. “This happens to be precisely what you would expect, given the perverse incentives baked into Obamacare, which took effect on January 1.”

More bad indicators

“During April, the FTE jobs ratio fell for the fifth month in a row, to 53.09,” he warned. “The earliest warning signal for every recession since 1955 (the first year for which the data is available) has been a significant, sustained decline in this ratio.”

He provided a history lesson:

“As of April, the fall in the FTE jobs ratio from its local peak was only 0.11,” he conceded. “This is not yet a strong indicator of an impending recession. Only one of the recessions since 1955 (that of 1970) was presaged by this mild a decline, and there were eight instances during the past 50 years where the FTE jobs ratio declined by this much over five months, and the economy did not fall into recession.”

Excerpts of his red flags:

“This having been said, there also has never been a case where the FTE jobs ratio fell for five months in a row and a recession did not follow. So the recent decline is definitely something to be concerned about.

“Based upon the historical record, if the current decline in the FTE jobs ratio were to continue, and to reach a cumulative 0.60, renewed recession would become a virtual certainty.

“In the case of the most recent recession, the decline in the FTE jobs ratio exceeded 0.60 five months before the recession officially started, and a full 15 months before the National Bureau of Economic Research (NBER) formally declared that a recession had begun in January 2008.”

Comparison of monetary policies

“It is now 76 months since our latest employment recession started. America’s FTE jobs ratio is still down by 5.10 from its peak, and is only 0.56 above its low point of the cycle,” he reminds us. “In contrast, at the same point during the Reagan recovery, the FTE jobs ratio was 2.01 above its prior high, having risen by 4.80 from its nadir.

“During the first 76 months of the Reagan recession/recovery, the value of the dollar in terms of gold actually went up by 6.47%. During the equivalent period during the Bush 43-Obama recession/recovery, the gold value of the dollar fell by 56.90%.”

It’s a long commentary. He further explains the above points, the fallacies of the Federal Reserve’s continuous money-printing policy, and more. All of which slow down the nation’s economic recovery and the creation of jobs.

Do yourself a favor and read his full analysis here.

From the Coach’s Corner, editor’s picks for related reading:

• Why Federal Reserve’s QE3 Won’t Help U.S. Economy
• Why Is Transparency Crucial at the Federal Reserve?
• Obama’s Broken Promise for Transparent Government – Study

“We hope that you are enjoying having your children graduate from college and come home to live in your basements.”

-Lewis Woodhill

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

Why Federal Reserve’s QE3 Didn’t Help U.S. Economy

Updated Feb. 26, 2016 –


The Federal Reserve showed terrible judgment in printing billions of dollars for cheap money. Among 314 million+ Americans, just a relatively chosen few — big investors — benefited from the Fed’s third edition in quantitative easing (QE).

The Fed has stopped its printing of money, but it’s too late.

There are many reasons why it’s been harmful — ranging from weak job growth to being a disincentive to save. It also hurt senior citizens badly because of the resulting negligible interest rates. Typically, a certificate of deposit interest rate has only been .05 percent on savings accounts of $50,000 or more.

Wise economists say the concept is deplorable. That includes Anthony Randazzo.

“…a fancy term for the Federal Reserve buying securities from predefined financial institutions, such as their investments in federal debt or mortgages – is fundamentally a regressive redistribution program that has been boosting wealth for those already engaged in the financial sector or those who already own homes, but passing little along to the rest of the economy,” says Mr. Randazzo, chief economist at the Reason Foundation.

“It is a primary driver of income inequality formed by crony capitalism,” he astutely points out. “And it is hurting prospects for economic growth down the road by promoting malinvestments in the economy.”

Federal Reserve’s Districts

Indeed, investors have gone bananas over QE3, despite the nation’s formidable problems:

• We’re in another year of a pathetic economy. Economic growth is a fantasy, a misnomer.
• Noted economists like Peter Morici, Ph.D., have been warning the U.S. is headed for a double-dip recession unless President Obama fixes the nation’s economic infrastructure, stops spending, and works with Congress to end the fiscal-cliff threat. (See: Dr. Morici’s economic analyses here.)
• Fewer Americans are working now than in 2000. Twenty-three million Americans are unemployed or under-employed, and if they get work, it’s part-time at smaller wages than they used to earn.
• Thanks to the Obama Administration’s undesirable budget proposals that failed in the House of Representatives and the heavy-handedness of Majority Leader Harry Reid in the Senate, a federal budget wasn’t adopted for more than three years.
• That’s not to absolve Republicans during the Bush Administration. They ran Congress and approved countless pork spending. Mr. Bush didn’t veto any pork until his sixth year as president.

No wonder the public debt keeps increasing. It’s about $19 trillion and counting.

The Fed’s support of banks prompts two questions: Where are the bank loans to business? Where are the bank jobs?

The Fed’s short-term rate – on loans between banks – has been near zero for many years. Bank profits have been huge – $34.5 billion in Q2 2012, according to the FDIC. Their balance sheets became much healthier.

The results: Many small businesses have long complained about the lack of bank loans and lines of credit. Before the Great Recession, banks had 2.2 million employees. But now there are thousands of fewer banking employees. No wonder most big banks are profitable.

Printing money hurts long term

Unfortunately, liberal Janet Yellen was appointed to replace Ben Bernanke as the chair of the Federal Reserve. She’s continued his absurd policies in unprecedented steps in a highly questionable attempt to boost the economy.

All of this means many Americans are mortgaged up to their eyeballs.

The Fed believes printing money out of thin air – issuing Federal Reserve Notes – is good for the nation. In recent years, his QEs have pumped up the stock market as he pushed interest rates lower to encourage spending.

Why Mr. Bernanke had critics

Republican presidential contender Mitt Romney — who has a track record in creating wealth and jobs – was opposed to such economic superficiality. Had he been elected, he said Mr. Bernanke didn’t have his support to be reappointed as Fed chair. (See why 5 Nobel Prize Winning Economists (Among Hundreds) Back Romney’s Economic and Jobs Plan.) 

Stock market recovery based on a band-aid approach hasn’t and won’t help the economy. Under-employment and unemployment will remain high and businesses won’t have customers for their products.

“This is a disastrous monetary policy; it’s kamikaze monetary policy”

-Peter Schiff

Ironically, investors are short-sighted in believing in the Fed’s bogus strategies. Creating superficial capital isn’t a solution. But instituting public policy for growth is.

Mr. Bernanke and Ms. Yellen aren’t the only Fed Chairs to come under fire for not understanding the economy or taking steps to help administrations stay in power.

Some examples:

• More than four decades ago, money-creation policies exacerbated inflation. As a young father of two small children, I’ll never forget working at two jobs, in part, to pay for the high price of milk in 1971. That’s when President Nixon imposed wage and price controls. True, the price of milk was frozen, but so was my salary and everyone else’s.
• In 1972, Fed Chair Arthur Burns over-stimulated the economy, which helped Mr. Nixon get re-elected despite the emerging Watergate scandal.
• In the slow 1992 economy, Fed Chair Alan Greenspan’s tight policies helped Bill Clinton to defeat President George H. W. Bush.
• Just four years later in 1996, Mr. Greenspan reversed course – he developed market-friendly policies that insured the re-election of Mr. Clinton.

That’s not to say the Fed has consistently performed poorly or disingenuously in recent decades. The nation had recessions in 1974 and 1975, which coincided with a terrible inflation rate. Remember President Ford’s WIN buttons, “whip inflation now?”

The tepid economy and President Ford’s pardon of Mr. Nixon from Watergate led to Mr. Ford’s 1976 defeat as Jimmy Carter was elected president.

It was President Carter’s foreign policy and economic failures – primarily, the Iran hostage crisis in which 52 Americans were held captive for 444 days and his inability to tame the 13 percent inflation rate – caused him to lose to Ronald Reagan in 1980. Mr. Reagan’s strong reputation, in intimidating Iran, was credited with the release of the hostages, who were finally freed literally just minutes before he moved into the White House.

Fed role model

Meanwhile, arguably in 1979, the new head of the Fed, chair Paul Volcker, had one of the most difficult economies with which to deal. A Democrat, Mr. Volcker, is recognized for solving the stagflation crisis. Stagflation meant the inflation rate was sky-high in double digits, economic growth was stagnant, and the unemployment rate was too high.

His measures – such as increasing the prime rate to 21.5 percent by 1981 – drew widespread anger. But he managed to tame inflation – from 13.5 percent to 3.2 percent. Combined with the economic approach of the Reagan Administration, America’s economic climate was a whole lot healthier.

In view of this history, one has to wonder about the answers to three questions:

1. Just like the appearances of Messrs. Burns and Greenspan, why has the Fed taken steps at the expense of America?
2. Or, why are the people at the Fed in over their heads?
3. Do Americans want continued fiscal-policy and monetary-policy dysfunctions?

It’s too bad. With the right leadership for fiscal and monetary policies, we’d be on the road to robust economic recovery and jobs creation.

From the Coach’s Corner, here’s a related article: Federal Reserve Typifies What’s Wrong with Economy 

“This is a disastrous monetary policy; it’s kamikaze monetary policy”

-Peter Schiff

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

Why Is Transparency Crucial at the Federal Reserve?

Furtive actions by the Federal Reserve show the need for a change to transparency.

Then-Federal Reserve Chairman Ben Bernanke argued in 2012 that transparency would lead to a “nightmare scenario” in the Fed’s monetary policies.

But many others, including me, feel the Federal Reserve has overtly overstepped its monetary authority – by actually undermining the authority of Congress on fiscal policy issues. Not to mention the bogus printing of money that only benefits Wall Street insiders.

Despite opposition from the Federal Reserve, the U.S. House of Representatives is acting responsibly for the welfare of the nation.

By an overwhelming 327-98 margin, the House passed an audit bill, which sits in oblivion the U.S. Senate.

“I don’t know how anybody could be against transparency,” said bill sponsor Rep. Ron Paul (R-Texas).

He justifiably insisted American voters should be allowed to learn details about the Federal Reserve’s behavior – which includes massive bank-rescue deals and financial support of foreign central banks.

“They’re sick and tired of what happened in the bailout and where the wealthy got bailed out and the poor lost their jobs and they lost their homes,” said Rep. Paul.

You might recall the nonpartisan Government Accountability Office (GAO) audited the central bank in 2010 as required by an amendment introduced by Sen. Bernie Sanders (D-Vermont).

“As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said Sen. Sanders.

The bill directs the GAO to fully audit the Federal Reserve. It would also eliminate the transparency exemptions that protect the Federal Reserve and the Federal Open Market Committee.

However, published reports indicate Democrats in the U.S. Senate will ignore the need for transparency. That’s despite the wisdom of Sen. Sanders.

Several Democrats in the House and Senate echo the propaganda of Mr. Bernanke – they feebly argue transparency would emasculate the Federal Reserve and would damage the central’s bank’s image.

“That will politicize the making of such policy, and I think it’s a bad way to go,” said the House Minority Whip, Rep. Steny Hoyer (D-Maryland).

Really?

It’s past time that he and Democrats in the Senate and members of the Federal Reserve stop acting like a ruling class. This is a democracy. Transparency is crucial.

From the Coach’s Corner, related articles on the Federal Reserve:

Why Federal Reserve’s QE3 Didn’t Help U.S. Economy — The Federal Reserve showed terrible judgment in printing billions of dollars for cheap money. Among 314 million+ Americans, just a relatively chosen few — big investors — benefited from the Fed’s third edition in quantitative easing (QE). The Fed is slowing its printing of money, but it’s too late.

Federal Reserve Typifies What’s Wrong with Economy — There’s still a troubling schism in U.S. politics, monetary policy and management of the economy. The Federal Reserve keeps printing money, which risks inflation and only encourages more bad monetary policy. For another example, consider Bloomberg ‘s shocking expose: “Wall Street Aristocracy Got $1.2 Trillion in Loans from Fed.” Yes, $1.2 trillion in secrecy.

Does the Federal Reserve Understand Small Business? — Small business is really the straw that stirs the drink in the nation’s ability to increase the number of jobs in this country. According to Small Business Administration (SBA) figures, small businesses make up more than 99 percent of all employers and employ more than half of all workers. Another SBA stat stands out: Small businesses have created 64 percent of all jobs in the last couple of decades. But small businesses have really suffered during and after the Great Recession.

“A politician is just like a pickpocket. It’s almost impossible to get one to reform.”

-Will Rogers

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

Photo courtesy of Stuart Miles at www.freedigitalphotos.net