The June jobs report that sent the Dow to over 17,000 for the first time in history has a lot of hidden data that is typically ignored by Wall Street. A 17,000 Dow represents false profits and rents.
First is that GDP had a negative 2.9% loss, but somehow, enough jobs were created to drop unemployment to 6.1%; the lowest level since September 2008.
Second is breaking down the numbers:
- Professional and Business Services +67,000
- Retail +40,000
- Restaurants and Bars +33,000
- Health Care +21,000
- Transportation and Warehousing +17,000
- Financial Activities +17,000
- Manufacturing +16,000
- Wholesale Trade +15,000
- Average Hourly wage increased 6 cents per hour
The biggest gainers were retail and restaurants at 73,000 jobs. And we still don’t know exactly what “Professional and Business Services” means, other than it includes Temporary Agencies. And the 6 Cent increase per hour in Average wages (Median would be a better measure) doesn’t even account for monthly inflation – which was a 1% increase in CPI from the previous month.
Third is a new Census report (PDF) that says that 25% of ALL Americans live in poverty areas.
But here are the bigger questions: Employment Participation Ratio, the number of working age people that are actually seeking work and working, has remained at the same record low levels (62.5%) for a few months now:
And the gap between U3 and U6 – those who are unemployed, and those who are employed, but wish they had more hours, or more wages, is still at its highest level ever in the history of the measurement.
Since the Great Recession, U3 (standard unemployment rate) has never measured anything useful. Add all of these things together, it’s clear that the 17,000 Dow is false profit, and/or represents rents. However, insanity is doing the same thing over and over again, while expecting different results. A 17,000 is indeed insane.
When we start considering supply and demand curves from the perspective of labor; when we wonder how we have full employment while few have jobs, I suspect is the Wall Street anti-psychotic.