According to Steve Liesmen, investors face a bit of a dilemma in attempting to figure out the health of the economy. Do they believe the falling GDP numbers or the jobs numbers which are relatively steady in light of the GDP problems? The real problem is how to do you glean meaningful information from statistics that are intentionally skewed to distort the real picture?
In the this segment on CNBC, Wilbur Ross notes that there are issues with the way jobs numbers are reported:
1) Not all jobs are created equal. Many of the jobs being created are low paying and part time positions. If a person loses a high paying full time job and replaces it with a lower paying, part time position, there is no distinction between the two.
2) If you look at the total number of people employed vs. the percent unemployed, you are presented with very different pictures of the economy. Over a third of the working age adults in the US are either unemployed or not seeking employment. And even if you choose to ignore those not actively seeking work, it is still indicative of problem as we now have system that disincentivizes productive behavior.
What Mr. Liesman failed to call attention to was a very interesting admission last week from the former Commissioner of the Bureau of Labor Statistics, Keith Hall, who noted the same problems with the unemployment figure of 7.6%. The employment to population ratio is now 58.7% — lower than when the recession officially ended. According to Mr. Hall, this tells him that the real unemployment number should be 3% higher or 10.6%.
So what does all of this mean to gold investors? With the Fed now using the unemployment figure as a metric for continued money printing, what are the odds that we can get to a QE-Off figure of 6.5%, particularly in light of a tumbling GDP? Despite some momentary lip service to the subject of tapering, all signs on the centrally planned road map continue to point to QE-Forever.
Check out the entire clip for some entertaining moments at the end where Mr. Liesman can’t figure out what it means to “clear the system” and Joe Kernan states “I’m the one who wants to do this forever. I want to assume the the economy runs on QE and let’s just do it for the next 50 years.”