This article is just more evidence that investigative journalism is dead. Even the Fed admits the unemployment rate has become a meaningless, anachronistic relic. Wondering why the unemployment rate dropped once again, sliding from 5.7% to 5.5%? The reason is that while the number of unemployed Americans dropped by 274K thousand while those employed rose by 96K, the underlying math is that the civilian labor force dropped from 157,180 to 157,002 (following the major revisions posted last month), while the people not in the labor force rose by 354,000 in February, rising to a record 92,898,000 (people who currently want a job rose to 6,538K) matching the all time high number of Americans not in the labor force. The labor force participation rate dropped once more, declining to only 62.8%, which is just off the lowest print recorded since 1978.
One really has to question the accuracy of the BLS reports given that the BLS reported that only 1,900 jobs were lost in the entire oil and gas extraction space, which was a vast underestimation of what is taking place in reality, when compared to not only corporate layoff announcements, but what Challenger had reported was going on in the natural gas space, when it calculated that some 21,300 jobs were lost in January in just the energy sector largely due to falling gas and oil prices.
Leisure and Hospitality- added 66K jobs
Education and Health- added 54K
Retail trade- added 32K
Together these three job categories accounted for 152K jobs, or more than half the total February job gains. They also represent some of the lowest paid jobs in the US.
45million US citizens are on foodstamps, 43% of citizens pay no income taxes or are net beneficiaries. Every year since 2008 more businesses have been dying than being started. As American free enterprise dies, America dies with it. The US is not in a recovery.
The country's main problem regarding the economy is the fact that we as a nation consume more than we produce which means that we send hundreds of billions of dollars overseas more than we take in from exports every quarter and so we are constantly getting poorer. 70% of the US economy is now driven by consumer spending. Overregulation by the government and the Fed's monetary expansion, manipulation of interest rates, and distortion of the market has transformed the country from a manufacturing based economy to a consumption and financial services based economy. Only by producing more than you consume and having a surplus can an individual/company/nation become wealthy.
When a nation has a current account deficit (trade deficit), the only way for its population to have a "real" net savings rate [meaning adjusted for inflation] is for the government to have a budget deficit (because more money is being sent abroad for foreign goods than the amount of money coming in through exports). I would remind you that before the US became the largest debtor nation in world history, it used to be the world's largest creditor. The suspension of the gold standard in 1971 to a fiat system of money born exclusively of debt caused rapid credit growth which shifted the economy from production to encourage debt-financed consumption. A nation cannot consume more than it produces forever. Look at the European countries that have strong economic performance also have current account surpluses- Norway, Sweden, Germany, Switzerland, etc. China is another export power house economy that has accumulated massive foreign reserves this way.
Now look at the countries going bankrupt Portugal, Italy, Ireland, Greece, Spain, Cyprus, etc. All have large current account deficits, budget deficits, and national debts up to their eyeballs in common. That is us in the not so distant future.
No amount of interest rate suppression will solve structural imbalances within an economy.
A nation cannot run trade deficits and continue to borrow money forever. Interest payments on the national debt (currently $250billion) are only low now because of 0% rates and the Fed's monetization of the debt. The interest rates will go higher eventually and that will be very burdensome on the federal budget. Medicare/Medicaid will not have sufficient funds to meet their obligations by 2024 as the population ages and starts collecting and more people become poorer and therefore gain access to Medicaid. By 2030 interest payments on the national debt and entitlements will consume the entire budget. The Federal Reserve is already leveraged nearly 80 to 1, technically it's insolvent already and people are calling for the Fed to leverage up even further with another QE program.
Government doesn't create wealth, it can only take resources out of the private sector and reorganize/redistribute them (often to the benefit of corporations who get contracts, subsidies, tax credits/deductions, regulatory favors, bail outs, etc. ). Only the private sector creates wealth. When the government redirects resources in the economy it causes malinvestment which creates bubbles and then the subsequent bust. The Fed inflated the money supply through the late 90s and blew up the NASDAQ bubble which burst in 2000. It was government sponsored enterprises Fanny Mae and Freddy Mac that had a direct line of credit from the Treasury, who bought up the toxic MBS that the banks packaged with subprime liar loans. The Fed also purchased MBSs furthering the public's impression that they were good investments. Government spending and Federal Reserve & the banking system monetizing/pyramiding debt creates bubbles.
Wealth disparity is at its highest point since the top of the 1929 stock market bubble because we are in a financial bubble right now caused by low 0% interest loans to Wall St. and the Fed pumping money into the stock market with Quantitative Easing. The stock market is inflated while the real economy on Main St. is in a depression. Inflation has driven up asset prices without having as much impact on consumer prices because the US exports its inflation to foreign countries in exchange for products and because the money is being hoarded in banks and brokerage accounts instead of being spent.