Refutation of Economic Illusion

Richard (Rick) Mills
Ahead of the Herd

Page 2 of 3


“Working-age persons" is defined as most people between the ages of 16-64. Excluded are students, homemakers, and people under the age of 64 who are retired.


According to the Bureau of Labor Statistics the labor force participation rate dropped 0.2 percentage points to 63.3 percent. This is the lowest rate in 34 years.


Considering population growth in the U.S. is positive and is one of the highest rates in developed countries, you’d think labor force participation would be growing, not dropping. The U.S. economy needs to add 150,000 to 250,000 jobs per month just to absorb the workforce's new entrants never mind make up for what’s been lost since the Great Recession.

“February's headline unemployment rate was portrayed as 7.7%, down from 7.9% in January. The dip was accompanied by huzzahs in the news media claiming the improvement to be "outstanding" and "amazing." But if you account for the people who are excluded from that number—such as "discouraged workers" no longer looking for a job, involuntary part-time workers and others who are "marginally attached" to the labor force—then the real unemployment rate is somewhere between 14% and 15%.” Mortimer Zuckerman, ‘The Great Recession Has Been Followed by the Grand Illusion,’

U.S. labor force participation is now down to where it was in 1979. The unprecedented 2.5 percentage point decline in labor force participation under President Obama amounts to 6.2 million Americans being pushed out of the job market - 6,200,000 have stopped looking for work, these people have been forced to give up.


Many of the jobs that are being created are part-time low wage second or third jobs going to those already working. The average work week is now a very short 34.5 hours because employers are shortening workers' hours or asking employees to take unpaid leave.

“The financial crisis destroyed some $16 trillion in household wealth. Americans have only recovered 45 percent of that amount…But when you break down that wealth recovery by income level, it gets worse. The Fed estimates that 62 percent of that wealth people have regained since the depths of the recession has come in the form of higher stock prices. And 80 percent of stock wealth is held by people in the top 10 percent of the income distribution.”  Erika Eichelberger, ‘Sorry, There's Been No Economic Recovery for Poor and Minority Households’

Here’s a few facts:

  • Medium household income has declined. Adjusted for inflation household incomes are now back to levels last seen in the 1990s - average per capita wage is around $26,000, household median income is at $50,000
  • Few Americans own any significant amount of financial wealth. The bottom 80 percent of Americans hold roughly 5 to 8 percent of all financial wealth (non-housing related)
  • U.S. Employment rate is not recovering, one in 12 Americans are jobless
  • The number of Americans living in poverty has now reached a level not seen since the 1960s. There are 50 million poor people in America. There are more than 146 million Americans considered either poor or low income
  • There are over 47 million Americans on food stamps
  • The banking system backs $7.4 trillion in insured deposits with $32 billion, that’s just .43 percent
  • 1 out of 3 Americans have no savings
  • Nearly half of American’s die broke
  • There are less Americans working manufacturing jobs today than in 1950 even though the country’s population has doubled
  • The U.S. has run a trade deficit with the rest of the world of more than 8 trillion dollars since 1975
  • The U.S. Social Security system is facing a 134 trillion dollar shortfall over the next 75 years


“The employment trend in manufacturing is overwhelmingly negative and has been for nearly twenty years. This country does not simply lack manufacturing jobs, it lacks entire industries.


The Manufacturers Alliance for Productivity and Innovation (MAPI) released a report in January 2013 detailing the generational decline in manufacturing output and capacity in the United States. In general, for every two new plants that come on line, three others are shut down. For every two jobs created at one plant, three are lost somewhere else.


The companies that make up our so-called “manufacturing base” often survive, but they do so by moving jobs and production overseas. The MAPI report shows dramatic increases in overseas production and sales by the foreign affiliates of American multinationals alongside virtual stagnation of domestic metrics in the United States.” Craig Harrington, The Continued Decline of American Manufacturing,




According to the Organization for Economic Co-operation and Development (OECD), the combined government debt held by the world’s advanced economies is at its highest point since the Second World War. In 1945, the debt topped out at 116 percent of GDP; at the end of 2012 it hit 114.4 percent. The OECD says we’ll hit a new high in 2013.


Global trade has slowed. According to the World Trade Organization (WTO) international trade rose 5.2 percent in 2011, two percent in 2012 and growth has been revised downward to 3.3 percent in 2013 instead of the 4.5 percent the WTO predicted last September.


According to The Economist world GDP grew by just 2.1 percent during the first quarter of 2013. The UN Department of Economic and Social Affairs (DESA) says growth of world gross product (WGP) is now projected at 2.3 per cent in 2013, the same pace as in 2012.


In a report titled ‘Update to Global Macro Outlook 2013-14: Loss of Momentum,’ Moody's, an international credit rating agency, expected the euro area economy to experience a deeper and lengthier recession than previously thought. Moody’s also expects the real GDP growth of developed economies in the G20 countries to stand at around 1.2 percent in 2013 followed by 1.9 percent in 2014.







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