I DON'T USUALLY QUOTE RUSH, BUT HE'S RIGHT ON THIS ONE!
Rush: "Obama's Jobless Numbers Are 'Corrupt'!"
The jobless rate reported today is “corrupt as it can be” because President Barack Obama’s administration has decreased the size of the workforce, Rush Limbaugh said on his radio show. According to the Department of Labor, employers added almost a quarter of a million jobs in January. According to Limbaugh, it eliminated 2 ½ million positions.
“The number of jobs not available to be filled exploded by an unprecedented, record number of 1.2 million,” he said. “That’s not a typo. That’s part of this 2 ½ million fewer jobs. It is corrupt as it can be.” He said the shrinking of “the overall universe of jobs” led to the misconstrued dip in the unemployment rate, to 8.3, from 8.5 in December. “No president has ever been re-elected when the unemployment rate’s over 8 percent, so guess what it’s going to be by the time we get to Election Day,” he said.
FROM JOHN MAULDIN (www.JohnMauldin.com) A GREAT INSIGHT ON THE GROWTH OF THE US ECONOMY
The 2.8% number is softer than it looks. Two-thirds of that growth (1.9%) was from inventory build-up (standard accounting practice says that growth in inventory increases GDP, while sales of inventory reduces it). “Real final sales (GDP less inventory changes) expanded at an anemic 0.8% annual pace in the fourth quarter, a sharp slowdown from the third quarter’s healthy 3.2% rate. That paints a different picture from the apparent pick-up in headline GDP growth from the third-quarter’s 1.8% yearly rate. The difference reflects the shift to inventory building in the fourth quarter from a drawdown in the third quarter.” (Barron’s)
I suppose one could spin inventory growth as businesses being optimistic about future sales and building inventory, but given the weaker retail sales of late (in comparison to previous years) that is rather doubtful. And so all that really happened was a total reversal of inventory sales in the previous quarters. There will be a drawdown of inventories over the next few quarters, which will be a drag on future GDP numbers, much like the pattern we have seen the past few years.
Retail sales growth was not strong. And for the last year, 90%-plus of total retail sales has come from decreased savings, as the savings rate dropped from 4% to 2%. It will be hard to go much lower, so the “boost” we got last year from retail sales accounts for most of the year-over-year growth in GDP. If most of retails sales growth came from reduced savings, that suggests that retail sales will not offer much in the way of growth for the coming year. Just saying.
Further, when calculating real GDP, one subtracts inflation. The Fed prefers an inflation measure called PCE (Personal Consumption Expenditures). It is essentially a measure of goods and services targeted toward individuals and consumed by individuals. The number you read in the various media is the CPI or Consumer Price Index. The CPI is inflexible, in that it’s always the same basket of goods. PCE on the other hand, is supposed to take into consideration the notion that if steak is too costly, we’ll eat hamburger. The CPI is typically 0.3-0.5% higher than the PCE, which is convenient if you want the GDP number to look better.
...Fast forward to today, and the year-over-year change of CPI was 2.5%, with the PCE only rising 1.7%. And last quarter was down sharply, to +0.04% on an annual basis. An anomaly of lower energy and commodity costs? Partially, for sure. So if their target rate of inflation is 2%, using PCE gives the Fed grounds for a looser monetary policy.
All in all, GDP was helped by numbers that are not likely to repeat. For a long time I have maintained that the US economy is in a Muddle Through range of around 2%. I remember when last year at this time we had estimates of 4-5% growth for 2011. I looked so bearish. Now, not so much, as 2% would have been better than what we got. I think we will be lucky to Muddle Through again this year. Mind you, if it was not for a potential shock coming from a serious European crisis and real recession, the US should not slip into outright recession this year.
- Blacks will vote for Obama blindly. Period. Doesn't matter what he does. It's a race thing. "He's one of US."
- Too many college educated women will vote for Obama. Though they will be offended by this, they swoon at his oratory. It's really not more complex than that,
- Liberals will vote for Obama. He is their great hope,
- Democrats will vote for Obama. He is the leader of their party and his coat tails will carry them to victory nationwide,
- Hispanics will vote for Obama. He is the path to citizenship for those who are illegal and Hispanic leaders recognize the political clout they carry in the Democratic Party,
- Union members will vote overwhelmingly for Obama. He is their key to money and power in business, state and local politics,
- The media love him and are openly biased against his opponent(s). They may attack the people who work for him, but they love him. After all, to not love him would be racist,
- Most other minorities and special interest groups will vote for him. Oddly, the overwhelming majority of Jews and Muslims support him because they won't vote Republican. American Indians will support him.
- Obviously homosexuals tend to vote Democratic. And lastly,]
- The "dependent class" not mentioned above will vote for Obama, which includes all of that 4&% who pay NO income tax at all.
Author of the Award Winner: THE COMPLEXITY CRISIS, and the exciting novel: THE CHINESE CONSPIRACY. Come see my blog posts on Forbes.com & American Express Open Forum: http://www.openforum.com/connectodex/small-business-trends?username=john-mariotti&isRecentPosts=True
John L. Mariotti, President & CEO, The Enterprise Group, Phone (mobile) 614-499-5577 http://www.mariotti.net, http://mariotti.blogs.com/my_weblog/
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