Those highly questionable US employment gains (page 2 of 2)

So, while leisure and hospitality jobs, for which employment growth is strong, earn about $ 240 per week, manufacturing jobs, which are being lost, earned $669/week, a multiple of income versus the jobs being created ex-construction.

Bill King then quotes Merrill Lynch's chief economist, David Rosenberg, who noted that, ' in terms of which industries are the hottest, look no further than the housing market, which directly and indirectly added more than 40k to last month's employment tally or about 1 in every 4 jobs created. In other words, this would have been yet another tepid near-100k nonfarm report without the housing bubble that the Fed is trying desperately to deflate. What then picks up the slack once the housing market turns from sizzle to fizzle?

Well, look no further than these other segments of the economy that were primarily responsible for the job gains we saw last month: restaurants, amusement parks, gambling casinos, administration/waste services, membership organizations, government and warehousing/storage, which were responsible collectively for one-half of the overall job growth posted in June....

Average weekly wages for most workers rose in June by $1.01 to $541.22. This followed a 59-cent decline in May, the department reported, after/ revising its earlier figures. After taking into account the impact of inflation, wages for production and non-managerial workers, who account for 80 percent of the workforce, were 0.6 percent lower in May than a year earlier.'

It should also be noted that according to a research paper by the Federal Reserve bank of Boston, unemployment is far higher (around 8%) than what the US government's statistics show.

I have pointed out before that the US economic expansion is not driven by capital spending, industrial production and employment gains but purely by appreciating real estate prices, which allow households to extract money form their homes by increasing and refinancing their mortgages. I think the above statistics which show declining real incomes and a deterioration in the quality of employment, in as far as high paying jobs are replaced by low paying jobs, confirm this view.

In addition, one sector where employment is growing strongly and in in which weekly earnings are high, is construction. In June the construction sector added 18,000 jobs and weekly earnings rose according to Bill King from $751.16 in May to 757.37 in June. But, since construction jobs are related to the greatest housing bubble in modern history, one can only imagine what will happen to these relatively well paying jobs when the housing bubble bursts....

I am always critical of analysts, but sometimes someone does really in depth and detailed analysis and sheds light on the lies that governments spread in order to make things appear rosy. Bill King King, is one of these remarkable people who, a few days ago also took the CPI apart and showed that inflation could not possibly be as low as the government contends.

What it means if the CPI is indeed higher than what the government suggests is that real GDP (nominal GDP growth less inflation rate) is hardly growing!