Deception on Jobs is a VERY Dangerous Thing Obama
I POST THIS ARTICLE IN IT’S ENTIRITY BECAUSE LINKING TO IT WILL ONLY SLOW YOU DOWN.
ONE MORE TIME OUR OBAMA-LED GOVERNMENT IS FEEDING US FALSE FIGURES.
LIES IN ECONOMIC TIMES LIKE THESE ARE NOT JUST DANGEROUS BUT DISASTEROUS
Faux job numbers could lead to real trouble
Deception is a dangerous thing. You never really
know when a lie may turn on you.
Take, for instance, the Labor Department’s
annual springtime boost in the faux jobs market. While it’s nice that the
government thinks there is an employment boom coming, this won’t be a good
development if that boom turns out to be imaginary yet still causes the Federal
Reserve to prematurely tighten credit conditions.
Let’s start from the beginning.
Early this month Labor reported that 216,000 new
jobs were created in March. It was better than Wall Street expected.
But the figure included 117,000 jobs that the
department thinks, but can’t prove, were created by newly formed companies that
might not even exist. In fact, the department is getting so optimistic about
the labor market that it increased this imaginary job count from just 81,000 in
As I’ve been telling you for months, the spring
always causes the Labor Department to goose its job-creation numbers. And maybe
sometime in the future this process will be warranted. But during 2009 and 2010
these springtime assumptions — which are officially called the Birth/Death
Model by Labor — led to major errors in the annual job count.
The next three months should be doozies. In
April 2010, the Labor Department guessed that 188,000 jobs were created by
these newly formed, maybe nonexistent companies; last May’s total job number
was jacked up by a 215,000 guess, and June got an artificial boost of 147,000
This year, Labor will likely be inserting even
bigger faux job totals for each of those three months.
In other words, you still might not be able to
get a job in the real world, but there should be plenty of fake jobs for the
newspapers to write about and the politicians to brag about in speeches. Why
should you care?
If you are just a regular person reading this
column you should be appalled that Washington has trouble getting its numbers
right. But wait, there’s more.
Interest rates have already been rising because
(and I don’t need to tell you this) inflation is a problem. Mortgage rates, for
instance, have moved three-quarters of a percentage point higher over the past
six months. And that’s without the Federal Reserve purposely tightening credit
The next three months’ job figures — if they
are as strong as I think they will be — could give the Fed a compelling reason
to, at the very least, end the money-printing operation it calls Quantitative
Easing. And it may even have to start talking about raising interest rates.
That won’t be good news for either bonds or
stocks, the latter of which have been on a truly unbelievable ride upward.
Remember the first investment advice you received (probably from your mom or
dad): if it’s too good to be true, be suspicious.
It’s gonna get exciting especially when you see
what happens by summer. (But that’s for a future column.)