Posted originally on the conservative tree house on July 2, 2021 | Sundance | 106 Comments
CTH has said repeatedly the road to serfdom is cemented with the catch-phrase “a service driven economy.” The June jobs report from the Bureau of Labor statistics [BLS LINK] highlights the JoeBama economic policy exactly that way.
Approximately 850,000 jobs were gained in June; however, simultaneously the number of long-term unemployed increased by 233,000 to the current state of four million.
While we should expect to see the leisure and hospitality industries as well as education rebounding from the various COVID-19 shutdowns, and indeed they did ( +343,000 and +155,000 respectively), manufacturing was flat (+11,000), and construction was down -7,000. The details inside the data are not as great as the top-line would presume.
CTH looks at alternative data connected to the overall economy; empirical data and sector specific trends inside industry. The biggest domestic issue is inflation, stunningly large increases in prices for fast-turn consumer goods like food and fuel. Inflation is one of the primary reasons we have stated home values and home sales have peaked on a MACRO level despite the massive amount of real estate investment purchasing underway by financial institutions.
When we look at durable good production, we focus on the primary drivers of higher cost middle-class or working class products. Seeing construction jobs decline by 7,000 at the same time real-estate values are increasing only points to the problem of working class not being able to afford new home purchases. In the real estate sector this is unsustainable; it is simply a matter of math, income stability and wages.
The same issue applies within the auto-manufacturing sector. Auto jobs were down -12,000 in June. Automotive manufacturing companies operate their production forecasts on short-term (6 month) and longer term (up to 5 year) analysis. The auto industry gets immediate (in real time) feedback throughout the supply chain, distribution and sales. They modify their employment quickly.
There are now 7,000 less construction workers and 12,000 less auto workers in June than May. This directly aligns with inflation and the substantial decline in real wages.
Additional confirmation of a weak blue-collar jobs situation shows up in work hours. In June “the average workweek for production and nonsupervisory employees on private nonfarm payrolls declined by 0.2 hour to 34.1 hours. (See tables B-2 and B-7.) This is not a sign of a healthy, broad-based expanding economy.
25,000 day-care workers went back to work; that’s good. That reflects the service workers going back to work in leisure, hospitality, hotels, restaurants, bars, venues and other service driven sectors. However, even that gain of 25k is soft when you consider the scale of U.S. unemployment which was unmoved at 5.9%.
The top-line data looks good with 850,000 jobs created, but when you look at the “good jobs“, those jobs with higher blue-collar wage rates, the outlook is a little more concerning. Everyone is paying more for gasoline & food, and that hits the checkbook quickly. It’s not a matter of random statistics, look at the people around you, your family, friends and community…. what do you see?
We hear almost nothing about corporate investment expanding inside the U.S. economy from either foreign or domestic corporations. Wall Street earnings are being enhanced by the return to a ‘service driven economy‘, unfortunately that creates a bigger wealth gap between the working class and the investment class.
Wake up Bernie Bros,…. you’ve been conned.