{"id":27253,"date":"2014-10-04T08:57:10","date_gmt":"2014-10-04T15:57:10","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=27253"},"modified":"2023-03-13T11:18:20","modified_gmt":"2023-03-13T18:18:20","slug":"black-coffee-unicorns-rainbows-and-the-improving-economy","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id27253-black-coffee-unicorns-rainbows-and-the-improving-economy.html","title":{"rendered":"Black Coffee: Unicorns, Rainbows and the Improving Economy"},"content":{"rendered":"

\"\"<\/a>It’s time to sit back, relax and enjoy a little joe<\/em> …<\/p>\n

Let’s get right to it this week …<\/p>\n

Credits and Debits<\/strong><\/p>\n

Credit<\/strong>:<\/span> Don’t look now, but the US dollar index is currently on its longest winning streak<\/a> ever — 12 weeks and counting. In fact, the latest upswing has some people in the mainstream media hailing the return of “King Dollar.”<\/a><\/p>\n

Debit: <\/strong><\/span>Then again, dollar strength is relative. Compared to other currencies, the dollar is nothing more than the best-looking horse<\/a> at the glue factory. After all, the US owes more than $200 trillion in unfunded liabilities. In reality, the emperor has no clothes.<\/p>\n

Credit:<\/strong><\/span> Even so, the rising dollar means Americans are paying lower prices<\/a> for imported goods — which is good since the US seems to produce very little at home anymore. On the flip-side, folks who use other currencies are paying more for greenback-priced commodities.<\/p>\n

Credit:<\/strong><\/span> Meanwhile, some people are celebrating the latest data out of Washington that shows 248,000 new jobs<\/a> were created last month, as well as upward revisions for July and August of 69,000 more.<\/p>\n

Credit:<\/strong><\/span> With all of those new jobs, the official US unemployment rate fell to 5.9%<\/a>; that’s the lowest it has been in six years. Too bad the government’s unemployment rate statistic is part of the “smoke and mirrors” that mask the true state of the American economy.<\/p>\n

Debit:<\/strong><\/span> Those who are willing to look behind the curtain will see that 80% of the new jobs created in the US last month paid low- or minimum-wages<\/a>. It’s impossible to build a sustainable growing economy with those.<\/p>\n

Debit:<\/strong><\/span> By the way, last month the average month-over-month hourly wage actually dropped<\/a>; it fell a penny to $24.53. For the year, US wages are up just 2% — so even though there is a strong demand for workers, it’s not translating to higher wages. Yes, more magic.<\/p>\n

Credit:<\/strong><\/span> Economist Joel Naroff suggested to USA Today that, “The only way we’re going to get stronger economic growth is if people have money<\/a> to spend.” Close, Joel; but no cigar. Strong economic growth depends upon the steady creation of quality high-paying jobs.<\/p>\n

Debit:<\/strong><\/span> Unfortunately, there has been a big decline in the number of quality high-paying jobs in the US for a long time now — especially in manufacturing<\/a>. Today they’re being increasingly replaced by minimum-wage and gratuity-based service sector positions.<\/p>\n

Debit:<\/strong><\/span> From NPR: “As a portion of the US economy, manufacturing has shriveled<\/a>. In 1952, manufacturing made up nearly 28% of the economy. Now, it’s about 12%. And the U.S. manufacturing position in the world has shifted dramatically. The U.S. share of global manufacturing has dropped from about 30% in the early 1980s to just about 17% today.”<\/em><\/p>\n

Debit:<\/strong><\/span> Frankly, now that the US — and the rest of the world — finds itself deep inside the central bankers’ Keynesian rabbit hole, nothing makes sense anymore. One example: With unemployment under 6%, why are 20% of American households<\/a> still on food stamps?<\/p>\n

Debit:<\/strong><\/span> Perhaps those food stamp figures might have something to do with the labor participation rate, which slid to a 36-year low<\/a> last month after 315,000 more Americans dropped out of the labor force. Yep — the economy is so “healthy” that 96 million Americans aren’t working; that’s an all-time record.<\/p>\n

Credit<\/strong>:<\/span> What’s that? You say the labor participation rate is falling because all of the Baby Boomers are retiring? Not true. In fact, as Zero Hedge points out<\/a>, 92% of those 248,000 new jobs last month went to people older than 55. Try again.<\/p>\n

Debit:<\/strong><\/span> I’ll let Zero Hedge sum things up: “What about the prime worker demographic, those aged 25-54, whose work output is supposed to propel the US economy forward? They lost 10,000 jobs.<\/strong>” <\/em>So much for the “improving” employment picture, huh?<\/p>\n

By the Numbers<\/strong><\/p>\n

America, we have a problem:<\/p>\n

49<\/strong><\/span><\/span> Percentage of American households that currently receive direct monetary benefits from the government.<\/p>\n

$2 trillion<\/strong><\/span><\/span> Amount of total government benefits Americans received in 2013.<\/p>\n

42 <\/strong><\/span><\/span>Number of American workers for every Social Security recipient in 1945.<\/p>\n

1.6<\/strong><\/span><\/span> Number of private sector workers for every Social Security recipient today.<\/p>\n

$12 billion <\/strong><\/span><\/span>In 1967, amount that the government estimated Medicare would cost in 1990.<\/p>\n

$110 billion <\/strong><\/span><\/span>Amount the US actually spent on Medicare in 1990.<\/p>\n

$600 billion <\/strong><\/span><\/span>Amount the US spent on Medicare in 2013.<\/p>\n

$256 billion <\/strong><\/span><\/span>Amount the government estimates Obamacare will cost taxpayers in 2023.<\/p>\n

$1.1 trillion <\/strong><\/span><\/span>Projected amount the US will actually spend on Obamacare in 2023 alone, assuming the government’s estimate is as accurate as the one it made for Medicare in 1967.<\/p>\n

Sources: Silver Doctors<\/a>; Weekly Standard<\/a>
\n<\/em><\/p>\n

The Question of the Week<\/strong><\/p>\n

[poll id=\"28\"]<\/code><\/p>\n

Last Week’s Poll Results<\/strong><\/p>\n

How much do you typically tip your restaurant server for good service?<\/p>\n