Let’s cut to the chase. According to the BLS household survey (CPS), there were 1,446,000 fewer people working full time in August than in August 2008.
That’s after an increase of 210,000 full time jobs in August. That’s the actual count, not the seasonal abstraction, so we have to compare that with past Augusts to get an idea if its any good or not. August is a swing month, sometimes up, sometimes down. The average change over the prior 10 years, which included a couple of ugly years in the recession, was -63,000. So this number wasn’t bad. It was slightly better than August of last year and 2012, but come on! It’s still 1.4 million below 2008? In 2008, the economy was in full collapse mode. The Fed has expanded its balance sheet by $3.7 trillion since August 2008 and there are fewer full time jobs now than then? Remind me again what that $3.7 trillion has bought.
Since August 2009, near the bottom of the recession, the US economy has added 6.25 million full time jobs, a 5.5% increase. That amounts to $588,000 in Fed QE per added full time job. But that’s ok. It’s been great for bankers, securities brokers, and hedge funds. While the number of full time jobs increased 5.5% stock prices rose 175%. It’s all good!
Or not. I have argued for a long time, and others have picked up the call lately, that the Fed’s policies have rewarded financial engineering at the expense of job creation. The Fed has made it profitable for corporations to borrow free money to buy back the stock options that they issue to their executives rather than investing in expanding their businesses and creating jobs. The Fed’s policies have enabled corporate executives and their financial enablers to conduct a massive skimming of the US economy and wealth transfer at the expense of everybody else. By promoting this behavior, not only has Fed policy been ineffective in stimulating real growth, it has been a moral outrage, decimating the middle class and robbing the elderly of their life savings as they’re forced to consume principal.
The result has been that growth in full time jobs barely keeps pace with population growth. The ratio of full time jobs to total population was 48.4% last month. That’s finally above the August 2009 reading of 48.2%. August 2009 was the bottom of the recession. At the bottom of the 2003 recession, before the housing bubble took off, this ratio was at 52%. In terms of a recovery in the number of jobs that might support a family, the Fed hasn’t supported recovery, it has suppressed it.
Last week’s selloff did less damage than it may have felt like. The drop stopped in the area of 3 crossing uptrend lines, ranging in length from short term to long term. Here’s what would tell us whether the uptrend is still in force, or signal that something evil this way comes.
I have added 8 new stocks to the swing trade chart pick list, including 2 shorts.
These reports are not investment advice. They are for informational purposes, for a broad audience of investment and trading professionals, and other experienced investors and traders. Chart pick performance changes week to week and past performance may not indicate future results, as you know. Trading involves risk, and these reports assume that you understand those risks and manage them according to your tolerance.