So Bloomberg is reporting “good news”:
“First-time jobless claims unexpectedly fell by 7,000 to 340,000 in the week ended March 2, the lowest since the period ended Jan. 19, according to data today from the Labor Department in Washington. The median forecast of 50 economists surveyed by Bloomberg called for an increase to 355,000. The four-week average dropped to a five-year low. Companies are easing up on dismissals as purchases of equipment climb and households maintain spending in the face of higher payroll taxes. Further declines in firings are a first step toward bigger employment and wage gains, and a report tomorrow may show payrolls picked up in February. ‘Every indication we have is that the labor market is beginning to pick up steam,’ said Drew Matus, deputy U.S. chief economist at UBS Securities LLC in Stamford, Connecticut, who correctly projected the drop in claims. ‘It’s all consistent with 2013 being an okay year despite all the fears about what sequestration might mean or Europe might do.’”
Maybe this is good news. Maybe we’ll see more employment. I would love for that to happen. After all, I’m in a business where I need people to buy stuff. That means I need them to have money in their pockets. I’m all in favor of more jobs!
But is that realistic? Look at this chart and ask yourself, “What were the jobs driving the economy right at the peaks on those charts?” As I wrote recently, the first peak was probably driven by computer jobs and the second by housing and real-estate. So again, the fact that all those people were employed wasn’t really good news because society didn’t need that many people working those jobs. What happened is that the government distorted interest rates (lowering them) so that money flowed out of savings into riskier investments. In the case of the dotcom bubble, there was probably more mere human error involved, but the cheap money amplified the mistake. Then money got even cheaper and suddenly the housing boom started. That was an insane misallocation of resources because there was no reason to think that real estate should suddenly become that much more valuable. But in both cases, the employment was built on delusion. Thus, those jobs wasted money and destroyed wealth and then disappeared.
So how does a sudden unexpected increase in jobs tell us anything about economic recovery in our near future? It doesn’t. It can’t. We don’t know if these new jobs are of real value or simply the results of all the new cash being pushed into the economy by the Federal Reserve’s “Quantitative Easing.” In fact, NPR reports that, along with the job news, the number of layoffs planned in the near future has risen—“up 37 percent from January and 7 percent from February 2012.” So maybe this is just another crest in Bernanke’s continual attempts to make another long term bubble.
On the bright side, the Federal Reserve has officially documented in their “beige book” that Obamacare is causing businesses to not hire people. Nevertheless, it continues to poison the economy with new money for the banking “one percent” to use for their personal advantage over the rest of us. Their spin:
“The report of continued modest growth gives little ammunition to Fed officials who want the central bank to begin to scale back its $85 billion-a-month asset-purchase program, known as quantitative easing. ‘We do not think that this Beige Book changes the balance of power between the hawks and doves on the Fed,’ said Thomas Simons, an economist at Jefferies LLC. Fed Chairman Ben Bernanke has made clear that he does not support a tapering of quantitative easing — at least not yet.”
So rather than permit society to build an economy based on supply and demand, Bernanke is going to continue to fake demand. The only result can be a series of false starts in hiring that then fall to a new round of layoffs—as the cronies on Wall Street build their fortunes on the ever-frustrated, ever-poorer sweat of Main Street.