Economic distortions are common. Governments have always tried to manipulate data, and subsequently convey false messaging. But, it’s important that Americans understand the current falsifications taking place before their eyes.
First, the unemployment rate is remarkably misstating the perceived strength of the labor market. The most common term one may hear is the participation rate. Right now it sits at a low 62%. This means that more than a third of Americans who can work have simply chosen to give up trying to find a job. These folks are excluded from the unemployment figures. So, the rate of employment is helped when more unemployed workers are moved out of that category and into the ‘not seeking employment’ camp. The more people not participating, the easier it is to advertise a low unemployment rate.
There’s another horrible trend brewing in the unemployment data. The Biden administration has consistently touted their job creation. In fact, just recently the number shocked everyone by showing a whopping 525,000 new jobs in the last thirty days. What gives? 7.6 million workers have two jobs. This high watermark means that nearly 5% of all American workers are working two jobs today. The newly created jobs are actually people securing a second job. Not, actually unemployed individuals finding employment.
The hard reality is this. Since March, the US government has advertised that 1.68 million jobs have been created. In fact, America has lost 168k jobs when the manipulated data is correctly adjusted. The economy does not have a strong job market. It has overwhelming inflation causing Americans to seek out additional jobs to survive.
The second economic myth centers around inflation. The average American is now being led to believe that a recession will reduce inflation. Slow down the economy and prices will magically drop. Many theorize that rising energy prices will subside due to dwindling demand. A reduction in demand will bring prices back to pre-Covid levels. Sadly, when you examine how long it took for prices to fall back to earth after they climbed in the 1970s, it’s crystal clear that, while a recession helps, it doesn’t entirely complete the puzzle.
Economic growth and expansion are necessary to complete the price drop. Companies need to produce products efficiently to pass on reduced costs to the consumer. This can’t happen in a period of slowed-down growth because the company itself isn’t profiting enough to pass on savings. Hence, the need for growth. So, while Americans can expect prices to drop in coming months, they most certainly are not returning to pre-Covid levels until the economy expands. That takes reduced government regulatory burdens, minimal geopolitical conflict, low amounts of legislative change from Congress, increased ability for companies to merge and acquire others, high consumer demand based on affordability, and full employment within an organization. We’re a long way away from all of these stars aligning.
The third economic myth is that consumers have cash leftover from the Covid bailouts and stimulus checks. Sadly, the consumer is in a very bad place. Historical saving rates are at decade lows. The rate has always hovered around 8-10%, but barely sits at 5% today. To make matters worse, consumers don’t only have dwindled savings, but have increasing credit card debts. Credit card debt has been building since mid-2021. Annually, the number has risen by 100 billion. Consumers are tapped out. They’re out of savings, and now their credit cards are approaching maxed-out values. But, the sad reality is, consumers aren’t frivolously wasting away their money. The data proves that consumers simply can’t keep up with the rising costs and are using their credit cards to buy essentials to survive.
The American consumer has dwindled savings, increased credit card debt, and is beginning to work two jobs to get by. Inflation isn’t going to disappear as we settle into this recession. The answer is in front of us. We are a remarkably well-positioned nation. We have natural resources to harness. We have corporations who have and can continue to innovate for future success. We have so much opportunity in America. We need government to stop trying to fix problems that they have already created. Step aside and let the economy fix itself. The ingenuity and creativeness of the American system has never failed. It will rise again as the economy comes back online. The only thing in its way are the D.C. bureaucrats.
Phil Your Day 