The supposed reason for the massive 400 point turnaround in the DOW last night was their GOOD Employment/Enemployment result, where the US put on 117,000 jobs and reduced Unemployment from 9.2 to 9.1.The Truth is, there are 2 significant Demographic factors which should also be taken into consideration when viewing US Empolyment, Unemployment & Economic impact.
Population GrowthThe US Population is growing at around 1% annually, which should increase the Employment (or at least employable) pool by 3 million annually or 250,000 per month, which would/should equate to an additional 150,000 real & additional jobs each month, if we use a standard 60% participation rate?
Retirements (Baby Boomers)Since January 1st this year, the Baby Boomer generation have officially reached retirement age. No doubt there are Boomers who have already been doing so unofficially, but starting on January 1st there are 80 million Boomers who offically started the transition to leaving the workforce.
That means over the next 18 years, there will be around 4.44 million annually or 370,000 per Month, which would/should equate to about 222,000 retirements each month, if we use a standard 60% participation rate?
In a fully functional Economy, those retiring would/should be replaced by others in the workforce and a further 150,000 SHOULD be added to the workforce, via Population Growth, just to tread water. All of which means, the total Employed Pool should expand at a rate of about 150,000 each month or 3.6 million over a 2 year period.
However, as you point out, the total Employed pool has actually Declined by over 700,000 in the last 2 years.
This means that the US Economy has failed by some 4.3 million jobs, over the last 2 years, just to keep up treading water, let alone to actually expand the Economy!These Demographics will not go away, both Population Growth & Boomer Retirements are likely to remain constant, particularly with Boomer retirements, as the next 10 years will see a larger portion of boomer retirements than the next 10 years, as the largest portion of Boomer births came in the period 1946-1956 and that rate then started to decline.
Now, I've provided all of those facts, to tell you this, THAT IS WHY DEMAND IS FALLING, as huge numbers of Boomers move into a lower Consumption Retirement lifestyle, plus a greater portion of the Total Population also moves into a lower Consumption lifestyle, as they lose jobs altogether or can not gain full time work!These factors, plus Peak Energy (Oil first), plus the existing massive Debt situation, plus issues relating to Climate Change are flowing to the rest of the US Economy and onto the wider Global Economy, which means, THERE IS NO RECOVERY AND THERE CAN NOT BE ANY RECOVERY!
By way of re-inforcing where the USA is now at, the ratings company Standard & Poors have today downgraded the US rating from AAA, which it has held for some 100 years, to AA+.http://www.dailyfinance.com/2011/08/05/americas-credit-downgraded-what-you-need-...In doing so S&P said, "The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability."
S&P also provided the 2 following graphs, which strongly relate to what's been happening -
The US government have already said that S&P have got their figures wrong, which is like "the pot calling the kettle black".Given past experiences with share market crashes, I suspect that there is still some way to go, before reaching a temporary market bottom!
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What's the Real truth? (Read 29145 times)
