The analogy of the mirage is a useful way to characterize much of our economy and society: we are led to believe in a state of affairs that is not just misleading, but is actually nonexistent. We are are constantly being bombarded by messages (remarks by folks such as Fed Chairman Jay Powell, commentary by “analysts” on platforms such as CNBC and CNN) that the economy is in decent shape. But on scrutiny this presentation is off base, at best; worse, it is intentionally fraudulent. This presentation of a bogus state of affairs is the function of The Mirage.
A recent example of this can be seen in the release of the May job numbers by the BLS. 139,000 jobs were added: a “solid” number that “proves” the economy is in great shape! Many “investors” jumped on the good news, and pumped the markets higher.
But that headline number is far from the full story.
For starters, ADP reported a very concerning job print. The 37,000 jobs number for May was the lowest private payroll gain in two years, and was the second consecutive month where the number was well below expectations.
Already something doesn’t add up. Especially with increasing reports of increasing layoffs in the tech sector. Including recent grads giving freaked out presentations on social media as to how they have sent out hundreds of job applications, have accomplishments like high GPA, etc etc… and failing to get a decent job. Not to mention the growing number of tech workers who have been laid off, and even with stellar resumes and experience… are reporting having a difficult time landing a new decent job.
One thing the MSM fails to do is to give fuller picture of the monthly report the BLS puts out. They fail to mention how that headline number is determined. It is not from a database, as is the case with ADP. It comes from a survey, specifically from one of two surveys. In this case it is from the Establishment survey; the BLS sends out surveys to businesses and collates the responses. The thing is, especially after the pandemic, the response to these surveys has declined (there is no law saying the companies have to respond). The result is that the job numbers have become quite “noisy.” We see this is in the constant downward revisions of the previously released numbers. In this May report, the previous two months saw a collective 95,000 miss. In case I need to spell it out, this means in March and April the numbers were overstated, to the tune of 95,000 for the two months combined.
Another problem is the lack of reporting of the results of the Household survey. This survey goes out to actual households and collects data on number of jobs from people who hold them (full time, part time, looking for work). This survey is even more “noisy” than the Establishment one. So some analysts (the few who seem to bother looking at the larger picture) will average the results of a number of months. So for the first five months of the year, with the results averaged out, we see a decline of over 400,000 jobs.
And with that number, out of sync with the Establishment survey, we are left, or should be left, to become skeptical of the headline number of jobs reported by the BLS (and hyped by the MSM). It should be noted that the sort of discrepancy just presented between the surveys, along with the constant downward revisions, has been in place for some time. A lot of the cheerleading over Bidenomics for example was simply misplaced focus on the headline number – a number that invariably got knocked down on subsequent reports.
And by the way, part time jobs are counted in the same way as full time jobs. The fact is, we know that the number of American workers holding multiple jobs is quite high. It needs to be noted that part time jobs almost never have benefits such as health insurance as with full time positions. Further, recently we have been seeing a decline in full time jobs. But there is a further problem, and that is these numbers, at a summary level, say nothing about the quality of the jobs. And that includes compensation.
Recent analysis by the Ludwig Institute for Shared Economic Prosperity (LISEP) is quite sobering. They simply looked at the fact that there are millions who work, whose jobs are part of the total presented by the BLS, who do not earn a living wage. In looking at the this group as well as others, such as those who do not have a full time job but want one, they came to the conclusion that approximately one in four workers are “functionally unemployed.” This leads to a figure of about 25% for the unemployment rate. And the thing is, there are many “on the ground” (who actually work as opposed to those who stare at numbers and stats on computer screens) who feel this 25% number is more accurate than what the BLS and MSM feeds us (with numbers in the 4% range).
But the foregoing is mostly ignored by all those who take the MSM at face value, including many of those so-called “investors” (overall I am taking an increasingly jaundiced view of these folks, who appear to act more like gamblers – hence the stock market having transformed into a massive casino). They are in the equivalent position of someone who in the distance believes they see something that simply is not there – a mirage. But when we note how this belief then translates into behavior – in this case, pumping the markets higher – we see why this is so. The Mirage is a mechanism to create the psychological conditions conducive to perpetuating the narrative that things are going well… and so pile into those stocks!
Updates
Since this was written fairly recently (at the time of writing), the June report from the BLS will be briefly mentioned. At the headline level: things are going really well!
But wait… August 1st the BLS came out with a “shocking” jobs report!
First, the headline number was a weak 73,000 new jobs print.
However, the real shocker was the revisions. And for June, instead of the initial print of 147,000 new jobs the revised number was 14,000. The thing is, a number of people, including many “investors” took that initial number as proof that the economy was in great shape. Meanwhile, we were hearing things like companies, including large ones like Microsoft, laying off workers right and left, tech workers complaining of difficulty of finding decent work – for new grads and those who had lost their jobs, and so on. Something didn’t add up. And the original numbers turning out to be way off base is… an example of The Mirage.