The statistical recovery

Once again a great labor report sent capital flowing from around the world into the US stock market.  The Dollar soared.  Gold plunged.

Over the last five months the US has averaged 178,000 jobs per month.  145,000 of those jobs appeared in no survey, were reported by no employers, but were simply added into the figure by government bureaucrats who decided based upon theoretical models to add those figures to the survey numbers.

In other words the US economy is averaging job gains of 30,000 verifiable jobs a month.  

QUOTED FROM THE BLS: The civilian labor force participation rate, at 63.5 percent, and the employment-population ratio, at 58.7 percent, changed little in June. Over the year, the labor force participation rate is down by 0.3 percentage point.

 

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 322,000 to 8.2 million in June. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

 

The average workweek for all employees on private nonfarm payrolls was unchanged in June at 34.5 hours.

 

 In June, average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents to $24.01. Over the year, average hourly earnings have risen by 51 cents, or 2.2 percent.  (In other words stagnant when including inflation.)

 

 DURING THIS SAME PERIOD (last five months) GDP HAS AVERAGED 1.6%

 

Is that a portrait of a booming economy?

 

No, obviously not.  

 

 It describes an economy on life support, dependent on nearly 100 billion dollars a month of Fed Stimulus Money.

 

But it is better than Euorope and the Emerging Markets.  So foreign investment keeps flopwing in here.  Until that changes, gold will remain under pressure.

 

But, as the dollar strengthens, and rates rise, that will eventually compromise profits, crash the stock market and tip GDP into negative territory.

 

Then where will the flow of funds go?