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<\/a>The Bureau of Labor Statistics reported this morning that the U.S. unemployment rate is now 7.6% percent, with 175,000 new jobs created in May. At the same time, the Bureau revised its April numbers down, saying 149,000 jobs were created in April, and not the initial 165,000 it reported.<\/p>\n\u00a0The unemployment situation in the U.S. in May was essentially the same as in April. (I wonder how the Federal Reserve looks at this. Does it say, \u201cWow, imagine what would have happened to the jobs market<\/a> in May if you didn\u2019t create $85.0 billion in new money during the month\u201d?)<\/p>\n \u00a0My readers know I don\u2019t care much for the \u201cofficial\u201d unemployment numbers we get from the government statistics office. I believe the official rate doesn\u2019t show the real picture, because it does not include people who have given up looking for work in the jobs market and people who want full-time jobs but can only find part-time jobs.<\/p>\n \u00a0When we take into consideration these two important figures that the official numbers leave out, the underemployment rate, as it is referred to, was 13.8% in May\u2014it\u2019s been hovering around 14% for years now.<\/p>\n \u00a0A startling 7.9 million Americans are working part-time, because they can\u2019t find full-time work in today\u2019s jobs market.<\/p>\n \u00a0In total, there are still some 12 million people in the U.S. jobs market looking for work. What\u2019s most troubling is that 37.3% of them have been unemployed for more than six months! The longer they stay out of the jobs market, the more difficulties these people will face in finding jobs as their skills become obsolete.<\/p>\n \u00a0Looking closer at May\u2019s jobs market report (which I feel was an all-round terrible report), new employment in industries like mining and logging, construction, manufacturing, wholesale trade, transportation and warehousing, and financial activities witnessed next to no change in May.<\/p>\n \u00a0Yes, the growth in the jobs market is in low-paying retail and service positions. We have college graduates working jobs that pay minimum wage.<\/p>\n \u00a0Dear reader, there is something definitely wrong with this economic recovery. The government has increased its national debt by $17.0 trillion, and the Federal Reserve\u2019s balance sheet has grown to $3.0 trillion\u2026and we still can\u2019t get create jobs.<\/p>\n \u00a0This so-called economic recovery smells funny to me. Maybe the recovery doesn\u2019t even exist. Take out the sucker\u2019s rally in the stock market, and there really isn\u2019t much left to the economy.<\/p>\n Michael’s Personal Notes<\/a>: <\/b><\/p>\n How can consumer spending<\/a> in the U.S. economy rise under these circumstances\u2026<\/p>\n In the first quarter of 2013, hourly compensation of Americans employed in non-farm businesses fell 3.8%. This was the biggest drop since the Bureau of Labor Statistic started to measure this statistic in 1947. (Source: Bureau of Labor Statistics, June 5, 2013.)<\/p>\n Consumer spending is not rising as one would expect in a real economic recovery. In fact, real personal consumption expenditures (excluding food and energy) adjusted for price changes rose less than one percent in the first four months of 2013! (Source: Federal Reserve Bank of St. Louis web site, last accessed June 6, 2013.)<\/p>\n And inventories of businesses in the U.S. economy also paint a grim picture of consumer spending. In March, manufacturing and trade inventories stood at $1.64 trillion, up five percent from March 2012. (Source: Ibid.) In an improving economy, like the one that the majority of media outlets and politicians tell us we are in, business inventories are supposed to decline\u2014not rise!<\/p>\n No, businesses building up inventories are not a good sign.<\/p>\n But in spite of the pressures on consumer spending, the stock prices of companies in the consumer \u201cdiscretionary\u201d sector\u2014that\u2019s businesses that sell nonessential goods\u2014continue to rise.<\/p>\n Take a look at the chart below of the Consumer Discretionary Select Sector SPDR (NYSEArca\/XLY) exchange-traded fund (ETF) to get an idea of what\u2019s happened to the stock prices of companies that sell discretionary nonessential items to consumers.<\/p>\n Chart courtesy of www.StockCharts.com<\/a><\/i><\/p>\n \u00a0Let\u2019s call a spade a spade: the above chart is not an indication that consumer spending is rising. It\u2019s a chart that simply shows that the stock prices of companies that sell consumers nonessential items are rising because investors are bidding up these stocks.<\/p>\n Don\u2019t let the stock market falsely tell you consumer spending in the U.S. economy is improving and that businesses are doing great, because that\u2019s simply not the case! The reality is that the opposite is happening.<\/p>\n Looking at the health of the U.S. economy, it is very, very weak. This is the weakest economic recovery following a recession I have ever lived through\u2014I believe many Americans would agree with me.<\/p>\n Spending by U.S. consumers makes up more than two-thirds of the U.S. gross domestic product (GDP). If consumer spending isn\u2019t increasing, we can\u2019t have a real economic recovery; it\u2019s that simple, regardless of what rising stock prices may allude to.<\/p>\n What He Said:<\/b><\/p>\n \u201cFor the economy the message from retail stocks is quite clear: Consumer spending, which accounts for roughly 70% of U.S. GDP, is in jeopardy. After having spent like \u2018drunkards\u2019 during the real estate boom years, consumer spending is taking the same trend as housing prices, slowing down faster than most analysts and economists had predicted. As news of the recession continues to make headlines in the popular media, the psychological spending mood of consumers will continue to deteriorate, lowering earnings at most high-end retailers and bringing their stock prices down even further.\u201d Michael Lombardi in Profit Confidential<\/i>, January 28, 2008. According to the Dow Jones Retail Index, retail stocks fell 39% from January 2008 through November 2008.<\/p>\n![\"XLY](\"http:\/\/www.profitconfidential.com\/wp-content\/uploads\/2013\/06\/XLY-Consumer-Discretionary-Select-Sector-SPDR-NYSE-Chart.jpg\")
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