Sunday, June 5, 2016

Shock Report on Jobs Signals Obama Economy Is on Brink of Recession

The New York Sun ^ | June 3, 2016 | Lawrence Kudlow 

The May jobs report is a shocker, with nonfarm payrolls up only 38,000 and private jobs up a mere 25,000. Investors and economists are making the case that this was a weird, one-off, statistical glitch and that stronger employment is on the way. They might well be wrong.
If you smooth out the numbers with a three-month moving average, job increases have been slowing for five months. The three-month pace in December was 281,000 jobs. In the May report, the pace nosedived to 107,000. The unemployment rate fell to 4.7%, largely because 458,000 people left the labor force.
This spells trouble for the economy. And if you step back and look at the whole business sector, a case can be made that the United States has been in a mild business recession for as much as a year, if not longer.
Take business fixed investment in equipment, software, plants, buildings, and so forth. This has been slowing for six straight quarters. It even went negative in the first quarter on a year-on-year basis.
Behind this business-investment slowdown, the broadest measure of profits from the GDP accounts, which closely tracks IRS profits, has been negative for the past three quarters measured year-on-year. This slump began in the second half of 2014, almost two years ago.
Profits are the mother’s milk of stocks and the lifeblood of the economy. While so many people obsess about the Federal Reserve, the reality is that stocks have been flat over the past year as profits and business investment have been weakening.
Meantime, core capital goods, including orders, shipments, and backlogs, have turned negative over the past three months and across the past year. This is a proxy for business investment, and it’s not a good omen....
(Excerpt) Read more at nysun.com ...

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