With yesterday’s 4% GDP print it’s becoming clear that the observation I had reported for several months that the US economy is overheated in key areas is starting to creep into mainstream consciousness.
When you pay attention to actual data, it’s easy to see the facts of what is happening on the ground well before mainstream economists and the Washington-Wall Street self congratulatory echo chamber of mainstream media press release repeaters. The clueless herd religiously follows the dumbed down seasonally adjusted headline numbers rather than actual data. Is it any wonder that they usually have no idea what’s actually happening in the US economy?
Today’s report on initial jobless claims continues the pattern of extreme readings that we’ve had our eyes on for 10 months. It set another record low for this week of the year, continuing a string of record lows that began in September of last year.
Another report released this morning suggested rising wage pressures, although that is probably skewed by the narrow segments of the labor market where skills are in short supply. Those wages are rising faster, but in the bulk of the economy where specialized skills are not required, wages are likely to remain stagnant because there’s still a massive pool of low skilled labor looking for work. As companies continue to cut workers, the oversupply of labor persists, lowering the market value of labor. These conditions are symptomatic of just how distorted the US economy is, thanks to the Fed’s QE and ZIRP, which reward speculation and financial manipulation at the expense of savings and real investment.
Today, the headline, seasonally adjusted (not actual) number for initial unemployment claims for the week ended July 26 was 302,000. That was 8,000 less than the consensus guess of Wall Street economists. The actual numbers, which the Wall Street captured media ignores, again show claims below the levels reached at the top of the housing/credit bubble in 2006. Since September 2013 when the number of claims first fell to a record low, the data has suggested that the central bank driven financial engineering/credit bubble has reached a dangerous juncture.
