Jobs Report Full of False Hope
by Peter Schiff: The
Fed's Tightening Pipe Dream
As is typical,
Wall Street and the media are celebrating a jobs report that is
not nearly as positive as the headlines suggest. The continuing
decline in the labor force participation rate was at least as important
a factor as the new jobs created in bringing down the official unemployment
rate to 7.7%.
rate has now dropped to 63.5%, the lowest level since 1981 when
the rate had plunged due to a terrible recession. It is important
to realize that at that time women had not fully entered the labor
Prior to that,
a single income was sufficient to support most families. When incomes
fell, and living costs rose in the 1970s and 1980s, American women
were able to enter the labor force and find employment. That is
no longer an option. So the only factors that are now helping families
make ends meet are low interest rates, debt accumulation, declining
savings, rising home prices, and government transfer payments.
the number of people who are no longer even counted in the labor
force rose by nearly 300,000 from January to February. This is greater
than the number of jobs created. Analysts simply cant look
past the headlines to see these disturbing trends.
the jobs that were created lean heavily towards the service sector
and those industries that benefit most directly from Fed stimulus.
The 48,000 jobs created in construction in February were underwritten
by the Feds $40 billion monthly purchases of mortgage backed
securities, which has stimulated home purchasing. An additional
32,000 jobs were added in healthcare, another sector that will do
nothing to promote long term economic health. In comparison, manufacturing
only added 14,000 jobs.
have characterized the February numbers as a Goldilocks
report that is good enough to signal growth but not so good that
it will encourage the Fed to dial down its stimulus. This is optimism
in the extreme. Whenever anyone mentions Goldilocks, its good
to start looking for bears.
of jobs being created now will disappear when either the stimulus
ends or rising interest rates bring back recession. When the time
comes to pay the piper for all this stimulus, the bill will be large,
and the collapse much worse than the financial crisis of 2008.
Schiff is CEO of Euro
Pacific Precious Metals and author of The
Little Book of Bull Moves in Bear Markets and Crash
Proof: How to Profit from the Coming Economic Collapse. His
latest book is How
an Economy Grows and Why It Crashes.
© 2013 Euro
Pacific Precious Metals
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