Pixie dust and magic...

 

 

"Double, double toil and trouble;
Fire burn and cauldron bubble"

 

Macbeth

 

 

Well, we saw it again this past week. What, you might ask? Magic! The GDP numbers came out for the second quarter as well as the jobs report for July. The good news - we are in great shape. The economy is healing. Hundreds of thousands of excellent jobs are being created. It is two chickens in every pot for every household. Nirvana, to say the least.

 

At least, that is what the wizard has told us. As he continues to try and make a silk purse out of a sows ear, the pixie dust is flying like dust in a Kansas twister. I am going to blow some of the pixie dust away to see if we can find some clarity on what is what with the economy.

 

Jobs - The jobs report was released late last week. It was okay, as it showed 162,000 jobs added. That brought the total number of jobs created in 2013 to over 900,000. Plus, by the magic of U3 employment statistics, the unemployment rate went down to 7.4%! Pop the corks, we are on a roll now! However, there are a couple flies in the ointment. First off, over 700,000 of the 900,000 jobs created are part time. In addition, many are in the service or hospitality sectors. Finally, the workforce participation rate continues to shrink, especially for the young. Good jobs lost, crumby jobs created, more people not working. Same song, different month.

 

GDP - For the past sixty years, our GDP have averaged 3.3%. Most economists agree that is a healthy economy. In 2013, the first quarter's GDP was 1.1% and the second quarter's was 1.7%. How does that stack up? Under President Reagan, our economy grew an average of 5.6% for his first three years in office. That was coming out of the Carter economy, which almost killed the country. Although some doubt its validity, China's GDP is close to 7.5% and still going strong. China - a communist country is beating the pants off of the beacon of free enterprise and capitalism (or it use to be).

Youth - Being young these days has to suck. I have already addressed the fact that the labor participation rate for youths is dropping like a rock. In addition, the unemployment rate for those still looking for a job is stuck in the double digits. Finally, it was reported last week that over 1 out of 3 young folks, ages 18 - 35, are still living at home with Mom and Dad.

Now that I have taken care of the pixie dust, here is the unvarnished truth - the economy has never healed and it still feels as if we are in a recession. Forget the stock market - that is where the real pixie dust exists. Nature will take care of the bloating in the market in due time and when it happens, it is not going to be pretty.

So the next time the wizard pivots on the economy, we need to make sure it is not a 360. In addition, we need someone to take away the wand and pixie dust. Just the facts and truth please....