Wothwhile reading if only for the statistics. But Roberts, as almost always recently, hits the nail on the head as far as where the economy actually stands.
According to the Bureau of Labor Statistics, the US economy lost 98,000 private sector jobs in March, half of which were in manufacturing. Today 13,643,000 Americans are employed in manufacturing, of which 9,849,000 are production workers.
Don’t blame this all on Bush. The manufacturing sector has been hemoraging jobs for decades. Globalization might work for a country if it maintains a strong manufacturing base which produces items for export. In the US, eh.
Government employs 22,387,000 Americans, 8,744,000 more than manufacturing. Even the category leisure and hospitality employs 13,682,000 Americans, slightly more than manufacturing. There are as many waitresses and bartenders as production workers.
Wholesale and retail trade employ 21,467,000 Americans. Professional and business services employ 18,036,000 Americans of which 8,368,000 are in administrative and waste services. Education and health services employ 18,699,000 Americans.
Financial activities employ 8,228,000 Americans. The information sector employs 3,010,000. Transportation and warehousing employ 4,532,000. Construction employs 7,338,000, and natural resources, mining and logging employ 751,000. Other services such as repair, laundry, and membership associations employ 5,516,000 Americans.
Roberts states that this is the ‘portrait’ of the US economy. Mind you, not all of the jobs left here in the US are of the Mcvariety. Many of the jobs are high paying, and there is a segment of the society which is doing quite well. For many of us, though, it looks as though a job at Wal-Mart/Target/McDonald’s, etc., might be the best we can expect. I can remember a time growing up when this type of job would be considered a starter job to prepare you for your real career.
Roberts then asks if this is the portrait of a ‘super economy.’ His answer, of course, is no.
To help answer the question, consider that US imports in 2007 were 17% of US GDP, according to the National Income and Product Account tables provided by the Bureau of Economic Affairs. In contrast, the BEA industry tables show that in 2006 (2007 data not yet available) US manufacturing comprised only 11.7% of US GDP.
If I understand his point, there’s roughly a 5.3% difference (GDP wise) between imports and exports. Roberts point out that even if we exported everything we manufactured we’d still have a trade deficit. I do wonder where farming comes in (my guess is under manufacturing), and I wonder if farm products are treated as manufactured goods in Roberts’ analysis.
If the US cannot close its trade deficit, it is unlikely that the US dollar can remain the world reserve currency. If the dollar were to lose the reserve currency role, the US government would not be able to finance its annual red ink budget by borrowing from foreigners, as the US saving rate is about zero, and the US would not be able to pay its import bill in its own currency. The rest of the world continues to hold depreciating US currency, because the dollar is the world reserve currency. The dollar is certainly not a good investment having declined dramatically against other traded currencies.
It is hard to see how this trend can be reversed.
The US unemployment rate is creeping up, and according to John Williams, the official unemployment rate greatly understates the real rate of unemployment. Williams has followed the changes that government has made to the official indices over the years in order to spin a more politically palatable picture. Williams uses the original methodology prior to the decades of spin. The original way of measuring unemployment indicates the current rate of unemployment in the US to be 13%, much higher than the 5.1% official number.
13% real unemployment??? EEEEEEEEEKKKKKKKK!!! I got hit by one of those ‘spins’ in the unemployment rate during the Reagan Administration (as long as you were working 10 hrs a week, you were considered full-time employed. I went from 40 hours a week at McD’s to 10 when it went through). I wonder how the populace would react if 13% were the advertised unemployment rate?
Williams also calculates the CPI according to the same way it was officially calculated prior to the recent decades of spin. Williams estimates the current CPI at 12%, three times higher than the official 4% figure.
That’s 12% inflation, and 13% unemployment. That’s a 25% misery index (for those of you who remember said index…and if I remember right, it added in the interest rate so we’d be over 28% if that is the case). We know things are bad with the economy. Perhaps it’s good to have Mr. Roberts point out just how bad things are. And I wonder how ‘hope’ or ‘change’ will be able to fix the mess we’re in.
Originally posted here: http://rjones2818.blogspot.com/2008/…