Recent headlines boast of the U.S. avoiding a recession and adding hundreds of thousands of new jobs. However, a closer look at the data reveals a less rosy picture. While the United States economy may appear to be in good health, there are underlying issues that warrant skepticism.
For instance, of the 353,000 jobs created in January, 136,000 were in government, social assistance, or health sectors. This surge in job growth is largely due to increased immigration, leading to a greater need for government and social assistance jobs at taxpayer expense. As a result, cities and local governments are under financial strain. The creation of these jobs may not be a true indicator of economic vigor.
Moreover, the total United States employment level declined by 31,000 last month. Full-time employment is at its lowest rate since October 2020, and 22% of employment growth since December 2022 comes from part-time employment. This could be due to inflation-battered Americans being driven into additional, part-time employment.
Despite the Labor Department’s claim that unemployment is at a full-employment 3.7%, the true unemployment rate may be closer to 24% when accounting for those who have abandoned their job search. Many of these jobs are in low-paying sectors such as health and social services, leisure and hospitality, and government.
As former colleague David Stockman notes, these sectors are on the low end of the value-added chain and the bottom of the pay scale. He points out that the Bureau of Labor Statistics (BLS) count of payroll jobs in goods-producing sectors is down 6% from a half-century ago, while government jobs are up 65% and leisure and hospitality employment is 217% higher.
The wage gap has also widened significantly. The Economic Policy Institute reports that wages for the top 1% skyrocketed 160% since 1979, while wages for the top 0.1% jumped a dizzying 345%. Meanwhile, the vast majority of America’s wage earners have struggled to keep up.
This economy has been labeled as “fake” by some, and there may be some truth to that. The economy’s appearance may be likened to an exotic racing car – sleek and shiny on the outside, but with a lemon lurking beneath the hood. The Federal Reserve, acting as the mechanics overseeing its maintenance, has made a wreck of the economy.
The question remains: who will ever execute the necessary repairs?
Let us know what you think, please share your thoughts in the comments below.
