Ross Powell is the founder of Survival 401k, a specialty financial services company that provides hard-asset based retirement account solutions and preparation recommendations. Please visit his website to explore the critical solutions that Ross offers. This article was originally published on US Daily Review: Finally A President Who Gets It: Jobs Make America Great
With the inauguration of Donald J. Trump swiftly approaching, our divided nation waits with great hope and expectation on one side and great rancor and trepidation on the other. Outbound Barack Obama has sought in his final stretch to define his legacy and to sabotage the incoming administration. One of the core planks of Obama’s stated legacy is the so called economic recovery from the financial crisis and Great Recession that began in 2008. The government measure of unemployment sits squarely below 5%, the claim of millions and millions of jobs have been created or saved resounds, and words of tremendous confidence, accomplishment, and congratulations echo through the Democratic offices and press conferences around the Beltway.
These cries of ‘mission accomplished’ ring hollow in the ears of struggling middle class families as well as in the broader economic data. The recovery was always a myth. It was promulgated by easy money from the Federal Reserve and falsified data. Lest this be dismissed as some incoherent alt-right diatribe, I’ll draw your attention to a report published in September 2016 from no less than the conservative bastion of Harvard. This analysis effectively obliterates Obama’s claimed legacy of economic recovery by pointing to data that is much harder to manipulate than the unemployment rate and jobs numbers. A summary article that compiles the core findings and charts from the reports is available here for those who have other things on their plate besides digging into seventy page statistical economic reports.
The government can set unemployment to whatever they’d like for the sake of convenience and cohesiveness of their narrative. Simply declare a group of people to be out of the workforce and they are suddenly no longer counted in the ranks of the unemployed even though they are not working. A similar dynamic is true of the jobs numbers. They always include an assumption that companies are being created and are hiring according to the birth-death model. Given that new business formation has never recovered, the assumptions are modeling fiction rather than reality. To top it off, when someone loses a full time job and replaces it with two part time jobs it shows up as a net gain of one job because the statistics count a part time job the same as a full time job. Anyone who has ever worked a day in their life or has a functioning brain cell understands the absurdity of counting all jobs as equivalent.
A better measure of unemployment would be to take the labor force participation rate (the percentage of the working age population currently working) and multiply it by the ratio of the current average hours worked per week benchmarked to 40 hours a week. This arrives at a figure that tells us the labor force capacity utilization. If every person in the labor force had a 40 hour a week full time job then this measure would be at 100% and unemployment would be at 0%. This seems like a fair measure but an unrealistic target. Currently we have a labor force participation rate of 62.7% and an average work week of 34.3 hours as of latest estimates from the vaunted Bureau of Labor Statistics that also gives you the phony unemployment and jobs numbers.
This more logical approach to figuring out the employment situation leads to a capacity utilization of 53.8%. By the back of the envelope, the US economy is still running just above half speed. Meanwhile, Janet Yellen has said that the Federal Reserve is worried about the economy overheating. This is a completely different picture than the one painted by the fraudulent unemployment and jobs numbers. Perhaps more brazen is that the fraud is revealed simply by a cursory look beyond the headlines and into how these numbers are generated.
When the reality of the employment situation emerges, it is easier to see why Donald Trump was speaking to tens of thousands of Americans every day on the campaign trail while Hillary Clinton was speaking to tens. He promised to make America great again, and she promised more of the same. Voters, critically in the rust belt, didn’t want more of the same. In the final analysis, even though lies are potent they are ultimately fake. Reality is still real.
The reality now is that even before taking office, Donald Trump has created a climate where businesses are looking to invest in the US again as well as to keep jobs here and bring them back. Whether through direct meetings or tweets, Trump has made some headway toward addressing this critical issue since his election. Alibaba, Carrier, Ford, Foxconn, IBM, SoftBank, Sprint, and more have all taken steps toward adding real jobs back to the rolls in the US or investing the capital that will create jobs.
While these measures still have yet to materialize, they represent a dramatic shift in tone and policy from the past eight years. Does anyone remember any announcement from any company during the Obama administration about moving manufacturing capacity to the US or making major investments? Surely there must have been something… All that comes to mind are the drama about tax inversions and the incessant layoffs and closures of all sorts of outlets, particularly retail.
Looking at the broader economic picture, there is a tremendous amount of work to be done to strengthen the things that remain and to turn the ship around. It will take time, diligence, and great effort. Trump looks to be the man for the job, but this fight is tremendously uphill. There are still the inherent problems of the grotesque national debt and the underlying monetary system to address, but if we’re going to have any chance of dealing with these critical issues at all we’ll need the physical economy that Trump has promised to build in order to survive.