Economist: U.S. market recovery is a fraud, Corliss Online Financial Mag
by Michelle Coha researcherEconomist:
U.S. labor market recovery is a fraud
University
of Central Florida economist Sean Snaith has this to say about the current
labor market recovery: It’s a fraud.
That’s
because there’s more to assessing
economic recovery than just monthly payroll job gains and a declining
unemployment rate, he said.
“You
need to look at the number of jobs being created in the context of the
potential number of workers in the U.S. economy,” Snaith said. “The gap between
payroll employment and the Congressional Budget Office estimates of the
potential number of workers in the U.S. economy is pretty darn scary right
now.”
If
payroll job growth were to persist at the average level of the past three jobs
reports and increase at just 148,000 jobs per month, it would take until
December 2021 for employment to reach its CBO estimated potential, he added.
In his
2013 third-quarter U.S. forecast, Snaith explains that by just focusing on the
unemployment rate, many analysts
erroneously are predicting a fast recovery that’s simply not there yet.
That’s
why it’s not surprising that consumers are holding back on spending, which in
the past has brought the economy out of the doldrums, he said.
Snaith
was only one of four national economists to predict that the federal Reserve
Bank would continue to funnel billions of dollars into the market on a daily
basis as a way to help stimulate the economy and not begin tapering that
process until 2014.
“Will
the Federal Reserve’s exit be more like Ginger Rogers gliding across the dance
floor or Miley Cyrus awkwardly twerking remains to be seen,” Snaith said. “But
given the phony labor-market recovery it could be some time before the Fed hits
the dance floor.”
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