Yesterday, I woke up to the news that Obama’s approval numbers are risen to 50% — 1 of every 2 Americans! The reporter attributes it to the improved economy.
What improved economy?
I know most Americans mainly rely on the MSM for their news, if they do even that. But sometimes I want to tear out my hair for their sheeple-ness (with apologies to sheep).
The plain truth is that the U.S. economy is NOT improving. Here are the reasons why:
1. That much ballyhooed news last week that U.S. unemployment has decreased to 8.3% in January (from 9%) is deceptive. See why, here. The 8.3% jobless rate also doesn’t include those 88 million (!) working-age Americans who are long-time unemployed and who no longer even try to find a job. Fewer and fewer Americans now work. The percentage of people participating in the labor market fell to 63.7% last month, the lowest level since May 1983. (H/t Joseph)
2. Foreclosures are on the rise again. A new report from RealtyTrac says 1 in every 624 U.S. households received a foreclosure filing in January, up 3% from the previous month. Foreclosure activity froze in many states in 2011, due to processing delays after fraud, or so-called “Robo-signing,” were uncovered in the fall of 2010. The thaw is now on.
3. Another city in California, Hercules, just went broke. The Hercules Redevelopment Agency, which as of February 1, 2012 no longer exists, went into technical default on its February 1 bond interest payment of approximately $2.4 million. Earlier in 2008, Vallejo, the largest city in Solano County of the S.F. Bay Area, had filed for bankruptcy. San Diego, San Jose and other California cities are on the verge–or already there but refuse to admit it. LA and San Fran are running up a one billion deficit over 3-4 years.
4. The most troubling indicator of a not-improving economy is the drop in U.S. gasoline and other energy consumption. As pointed out by astute analyst Charles Hugh Smith:
“The basic thesis here is that petroleum consumption is a key proxy of economic activity. In periods of economic expansion, energy consumption rises. In periods of contraction, consumption levels off or declines.
This common sense correlation calls into question the Status Quo’s insistence that the U.S. economy has decoupled from the global ecoomy and is still growing. This growth will create more jobs, the story goes, and expand corporate profits which will power the stock market ever higher.”
But the chart below “shows the U.S. consumed about 21 million barrels a day (MBD) at the recent peak of economic activity 2005-07; from that peak, ‘product supplied’ has fallen to 18 MBD. The current decline is very steep and has not bottomed.
This recent drop mirrors the decline registered in 2009 as the wheels fell off the global debt-based bubble. Those arguing that the U.S. economy is growing smartly and sustainably have to explain why petroleum consumption looks like 2009 when the economy tipped into a sharp contraction…. [G]asoline has declined about 700,000 barrels per day from 2007, from 9.2 MBD to 8.5 MBD in November 2011. This represents about a 13% decline.”
Consumption of other energy has also tanked. As seen in the chart below, “Not only has electrical consumption never recovered the levels of mid-2008, it peaked in mid-2011 and has begun a sharp decline in late 2011.”
Smith concludes: “Clearly, electrical consumption is in a downtrend with no recent historical precedent. Those claiming that U.S. growth is sustainable and the Dow is heading for 15,000 must square their rosy projections with sharply declining energy consumption. The two simply don’t match up.”
Which leads to the question of why the ginned-up rose-tinted view? Here’s Smith:
“The task of the financial/political/media Status Quo is to convince Americans to overlook the abundant evidence of economic deterioration and focus on heavily juiced “evidence” of robust “growth.”
The game plan is this: if the Status Quo can convince you that the economy has righted itself and from here on in everything will get better and better, every day and in every way, then we will abandon financial rationality and start buying homes we can’t afford on credit, cars we can’t afford on credit and boatloads of stuff from China that we don’t need on credit….”
So there you have it:
- 88 million Americans have dropped out of the job market and are not even included in the Obama administration’s unemployment statistics.
- Home foreclosures are on the rise, again.
- Another city in California has gone belly up.
- America’s energy consumption is tanking.
That is not a picture of an improving economy!