Official government statistics about the U.S. economy have been contradictory and confusing for some time. Closer inspection reveals that federal overspending and overregulation have seriously damaged the economy, and that the worst of these policies are yet to come.
Latest Government Report show Both employment and average hourly wages rose more than expected in May, but the unemployment rate rose slightly. It’s late It rose 0.1 percentage point after three months of increases.
The market is still absorbing huge amounts of money from the federal government, and that money has not yet fully receded.
The job growth seems at odds with recent signs. The economy is weakeningIn addition to the contradiction of rising unemployment, As a sign of deterioration Stagnant retail sales, slowing consumer spending, weak industrial production and manufacturing orders, rising consumer debt, sluggish new housing starts, declining annual earnings for full-time employees, and rising commodity prices.
Consumer Confidence Rising in May It marks the third straight month of decline but is still well below levels during President Donald Trump’s term in office.
Understanding the current state of the economy is further complicated by the Biden Administration’s notorious habit of reporting inaccurate numbers that make them look better than they actually are, and then quietly revising them when people’s attention is diverted to new, inaccurate and overly optimistic numbers released the following month or quarter. For one month, the Administration reported economic growth of 1.6% in the first quarter of 2024, then revised it downward to 1.3%, a sharp decline from 3.4% in the fourth quarter of 2023.
Surprisingly, Federal Reserve Chairman Jerome Powell Hospitalized He believes The White House is falsifying the books“While there is some argument that payroll numbers may be somewhat exaggerated, they are still growing at a strong clip,” he said last week.
Even if we accept the numbers at face value, a closer look reveals dire results. Rising employment and unemployment mean more people are in the labor force and looking for work. Unfortunately, I got it. ZeroHedge’s “The US is growing jobs [illegal aliens]more people are working below the minimum wage, which could explain why inflation hasn’t risen sharply over the past year. [illegal aliens] I was hired.”
Employment for legally resident American workers has not increased over the past year, and wages are being driven down by undocumented immigrants accepting wages that Americans cannot.
With employment conditions for American workers stagnant at best, the job market is another indicator that economic growth is slowing, and the Federal Reserve should cut interest rates to reduce the inhibitions on economic activity. The Federal Reserve decided at its meeting last week not to cut interest rates for fear of a resurgence in inflation. In March, Federal Reserve governors said they planned to cut interest rates three times this year. Now they are predicting three cuts. Only one rate cut.
But the market has already priced in three expected rate cuts this year, suggesting a correction is on the way.Stock markets were still stable after the Fed’s rate announcement, with the Dow Jones Industrial Average down slightly and the S&P 500 and Nasdaq hitting record highs.
Economist Robert Genetsky calculates that the S&P 500 is currently 34% overvalued. If investors decide the market is nearing a peak and start selling to lock in profits before prices fall, the market could fall sharply.
The federal government has artificially pumped trillions of dollars into the economy to prop up markets since 2020. This overspending continues: In the first eight months of the current fiscal year, the federal government has already accumulated over $1.2 trillion in additional debt, with a staggering $348 billion deficit in May alone.
Meanwhile, investors reportedly believe the US economy will enjoy a massive expansion thanks to AI.The hype around artificial intelligence High-tech companies, semiconductor manufacturers, and utility,” The Wall Street Journal report.
But the AI craze may be more of an excuse than a legitimate reason to invest. The market is still absorbing huge amounts of money from the federal government, which has not yet fully dissipated. As Genetsky points out, “the near-term outlook for stocks is somewhat brighter,” but slowing housing and manufacturing production indicate that government stimulus is fading and the Fed’s interest rate hikes may be starting to have an effect.
Rising interest rates discourage businesses from investing in production and discourage consumers from purchasing the goods that support those businesses. cause direct harm to the economy By 2025, that figure will be $3.95 trillion, with indirect opportunity costs of a staggering $75.05 trillion in that year alone. Andrew Langer of the Institute for Freedom write“Opportunity cost reflects potential economic activity, such as innovation, business expansion and job creation, that is lost due to regulatory burdens.”
Such a burden on business activity will reduce the country’s productive capacity, regardless of the benefits expected from AI.
The government, the Fed, and the markets seem to be operating under the assumption that the U.S. economy can withstand any amount of bad treatment from the federal government. But economic data shows that this is wrong.
