Deteriorating real economic fundamentals – The most important economic report out last week was retail sales for February, which showed at 0.1% decline from January. This was a surprise to Wall Street’s brain trust, which was expecting a 0.4% gain. Keep in mind the 0.1% decline is nominal. After subtracting inflation, the “unit” decline in sales is even worse. This was the third straight month retail sales declined. The decline was led by falling sales of autos and other big-ticket items. In addition, a related report was out that showed wholesale inventories rose more than expected in January as wholesale sales dropped 0.2%, the biggest monthly decline since July 2016.
Retail and wholesale sales are contracting. What happened to the tax cut boost to spending? Based on the huge jump in credit card debt to an all-time high and the decline in the savings rate to a record low in Q4 2017, it’s most likely that the average consumer “pre-spent” the anticipated gain from Trump’s tax cut. Now, consumers have to spend the $95/month on average they’ll get from lower paycheck withholdings paying down credit card debt. As such, retail sales have tanked 3 months in a row.
Paul Craig Roberts published a must-read essay on the slow death of the U.S. economy:
As for the full employment claimed by US government reporting agencies, how does full employment coexist with this reported fact from the Dallas Morning News: 100k Applications For 1000 jobs.
Toyota Motor Company advertised the availability of 1,000 new jobs associated with moving its North American headquarters from southern California to Texas and received 100,000 applications. Where did these applications come from when the US has “full employment?”
Clearly, the US does not have full employment. The US has an extremely low rate of labor force participation, because there are no jobs to be had, and discouraged workers who cannot find jobs are not measured in the unemployment rate. Not measuring the unemployed is the basis of the low reported unemployment rate. The official US unemployment rate is just a hoax.
You can read his full commentary here: America Is Losing Its Economy
“Toyota Motor Company advertised the availability of 1,000 new jobs associated with moving its North American headquarters from southern California to Texas…”
Why on earth would they move their headquarters out of California? lol
Just want to comment on that Paul Craig Roberts article. Many of those 100,000 applications were probably from people who already had a job. That is how it is most of the times. Out of all the job applications that I have seen in the last 35 years at places I worked, by far the vast majority of job applicants already had a job or they were people who just graduated from school etc… not people who were unemployed and could not find a job. Now some of the applicants did not have a good paying job and wanted more money and some were just working part-time and wanted more hours. Also these 100,000 applications were taken over a two year period so it is not uncommon for some people to put in a second application a year or so later. So there might have been 100,000 applications but from only 80,000 or 90,000 people. So just because you have 100,000 applicants for 1,000 jobs does not mean you can’t have “full employment”. Not saying that this is the case today. Just saying it is remotely possible.
As far as no jobs to be had, there are plenty of jobs available in many parts of the country. Just not enough good paying full-time jobs unless you have the right skills.
Paul Craig Roberts says that discouraged workers who cannot find jobs are not measured in the unemployment rate. Well that is not completely accurate. Only long-term discouraged workers are not measured in the unemployment rate. These are people who want a job but have not worked NOR looked for a job in more than a year. Short-term discouraged workers are however factored in the U-6 unemployment rate. Maybe it would help if some of these long-term discouraged workers improve their job skills or their physical appearance or be willing to move to areas of the country that had jobs. Of course it would also help if they applied for a job instead of doing nothing.
As far as the official U.S. unemployment rate being a hoax, yes the U-3 and U-6 unemployment rates do not take into account all of the unemployed. The real unemployment rate is above 10% and maybe as high as 20%.