*Special Report* Lousy Jobs Data Reveals A Sick Economy
Today's Jobs data was exceptionally disappointing. A mere 38,000 jobs were added when 158,000 were expected. The internal numbers were disappointing as well with far more part-time jobs being created versus full-time, and government employment being one of the gainers. We definitely don't need more bureaucrats hounding the productive individuals that are left in America. The lousiness of today's jobs report prompted me to call in and record a special audio segment. I hope you enjoy the discussion.
Today's Jobs data was exceptionally disappointing. A mere 38,000 jobs were added when 158,000 were expected. The internal numbers were disappointing as well with far more part-time jobs being created versus full-time, and government employment being one of the gainers. We definitely don't need more bureaucrats hounding the productive individuals that are left in America. The lousiness of today's jobs report prompted me to call in and record a special audio segment. I hope you enjoy the discussion.
Hello, everybody, and thank you for joining us for this special report.
Today, we had a lousy jobs report, which has excited the markets.
We want to talk about that a little bit, and with me to talk about that is Chris Rossini.
Chris, welcome to this special report.
Yes, hello, Dr. Paul.
Let's get started.
It was actually the worst report in approximately five to six years.
Only 38,000 jobs were added.
There was 158,000 expected, so it's a big miss.
So what are your thoughts, Dr. Paul, on the big picture with this report?
My first reaction is, why should anybody be surprised?
Because many of us have been predicting that there's a lot of problems out there, and sometimes the government hides these problems.
When they get very bad, then they have to confess up to it.
So there shouldn't be a surprise that the report was so negative.
I happen to think that a large portion of our economy has been in recession and even depression for the last eight years, and that the numbers that we get from the government are always fictitious and always to paint a better picture.
And they worry from minute to minute about what the interest rates should be and what adjustments they have.
And it's pretty amazing that so much attention is played on this.
But certainly the reaction to this is an indication that the people who deal with large sums of money play an important role in what happens.
But this is very, very negative, and they're confessing that it's negative.
And even though there were only 38,000 new jobs this month, they adjusted March and April sharply down.
So the economy's been in adulterums, and I think the American people know that, and they shouldn't be surprised.
But this is the type of thing that Ariston economists are never surprised about because these corrections, these problems, these recessions and downturns are inevitable.
You know, it was said that Obama had this terrible economy, but it wasn't he that created the bursting of the bubble in 7 and 8.
That had to do with the Republicans, but really it didn't have to do with Republicans.
It had to do with monetary policy, and it was a predictable event.
And even today, the sudden announcement that there's a downturn in the economy, you can't say, see, it's all Obama's fault.
It isn't.
It's a philosophy of economics that has been endorsed by Republicans and Democrats for a long, long time.
It has to do with the Federal Reserve, distorting the markets, getting overcapacity, malinvestment, too much debt, and this pretense that you can do central economic planning through the Federal Reserve.
So nobody should be surprised by this, but the market certainly was annoyed by this because they believe the propaganda, and now they have to adjust their investments.
And that's why we saw such significant changes in the various markets today.
And I don't think this bodes well for the economy or for the markets.
Yes.
And, you know, a few of the internal statistics that I saw this morning are pretty bad as well.
For example, full-time employees fell 60,000 jobs while part-time employees rose 139,000.
What does that tell us about what's happening in the economy, Dr. Paul?
Well, the good jobs aren't coming back, and that's the big problem.
And of course, some people would say, well, all the good jobs are going overseas, and nobody takes responsibility for a lousy economy here, the way we run things, you know, whether it's taxing regulations or monetary policy, government spending, and this sort of thing.
But jobs sometimes go into the wrong places.
The government employees went up, and that certainly doesn't add to the economy, which means that even the GDP figures, which everybody follows, are fictitious too, because as government spends more money, the GDP goes up.
If you buy more missiles and bombs and you go and waste in some war someplace, that's spending here that's considered part of the GDP, and it doesn't help the average person.
A lot of people left the workforce.
There's still around 664,000 left.
Now there's over 102 million people who are unemployed or no longer looking for work.
Reflections On Economic Troubles00:06:27
So this is huge.
And this is the reason that we saw some very sharp reactions today.
We saw the stocks have down sharply.
And who knows, by the end of the day, sometimes they're revived and they can be talked into something.
But right now, it should be a natural response that stocks are way overpriced because that's part of the malinvestment and the inflation that is built into the system.
But the biggest thing is the entertainment, if you want to call it that, about what's the Fed going to do?
What's the Fed going to do?
Here they've conditioned everybody in the market.
Well, we're going to nudge up interest rates a little bit because they need a little room.
If the recession is coming, we have to have something to do, and that is lower interest rates.
So they're going to be talking right now with this announcement.
It's almost like nobody believes they'll raise interest rates in June.
And from their viewpoint, as managing the economy, it would be crazy for them to do it.
Of course, free market individuals would argue the case that they shouldn't even be in the business as a fixing rate.
There's no right rate that they can fix.
But what they should do is move in the direction or totally eliminate the fixing of prices, the price of money, the interest rates.
Nobody would think if there was a problem in the manufacture of bread, the best thing we could do is have a board in Washington fixing the price of a loaf of bread.
That's insane.
But everybody tolerates this business of the Federal Reserve fixing interest rates sort of in secret.
And everybody is anticipating this.
And for the moment, people make a lot of money and lose a lot of money.
Today, I imagine there were a few people who lost some money.
It is pretty amazing how they anticipate that.
But this was not good for the dollar today.
The dollar was down sharply.
It was down over 1%, 1.5%, which is a big drop.
And likewise, gold was up, you know, as a reflection of that, up 2.5%.
But the dollar going down is a mixed bag, too, because the dollar going down when there's no other decent currency in the world is really amazing that people would move to the yen or the euro or something else under these conditions.
And therefore, the dollar generally gets a free ride and it stays stronger than it deserves to be.
But evidently today, the people were figuring, well, interest rates are even going to get down lower, which is practically impossible.
Negative now, it's really pretty amazing.
So I think that this is a sign that things are in very, very bad trouble.
And they're not going to solve it by tinkering with interest rates or tinkering with, well, what we need is more spending by the government to stimulate the job market.
I think they're probably panicking.
Well, let's get the Plunge Protection Team action.
What do they know how to do?
And they're probably very active trying to smooth these markets out and buy and sell.
But ultimately, the market is overwhelmingly more powerful and they won't be able to control it.
The average person doesn't own much software.
They're not going to react too much to this.
But after a while, this will be reflected on more price inflation in this country, more unemployment.
And it really is catching up with what the people already know, the anger and the frustration by Democrats and Republicans and independence and all the fighting going on politically.
It's a reflection of the fact that the people know there's something wrong.
They don't know what's wrong.
They're very upset and very annoyed.
And they're striking out.
And it looks like it's going to get more violent, but nobody's dealing with the real problem.
And the idea is there's a cancer in the land and you need to treat it.
And you can't treat it with an aspirin.
And this is what they're trying to do.
They're in total denial.
And that's why I expect the friction and the argument and the violence to get much worse.
And still, we admit, this is a failure of an epic mismanagement of the economy by the interventionist, by the Keynesians, planning, every little thing.
I think this is a significant day.
Who knows what tomorrow will show?
They may bump up and down.
But this is a true reflection of how serious the problem is.
It's a wake-up call, but I'm afraid those who are in charge are not going to wake up and we're going to continue on the same path.
Yes, I agree.
Only a few points that I would add or stress to build upon what you said.
It is interesting that with such a pitiful jobs report that government employees went up.
We have to remember that these are more bureaucrats that are being added to hassle the productive in our society.
So that only adds the negativity.
Also, with the Federal Reserve, they shouldn't be setting interest rates at all, but they're boxing themselves in slowly but surely.
And what are they going to do if someday they're forced to raise interest rates due to price inflation?
Then they're really going to be in trouble.
Right.
You know, and the government employees, you mentioned it's not a benefit.
Well, it's a strong negative because I think everything they do in that manner is a drain.
We ought to subtract that.
Instead of adding that to the GDP, we ought to subtract it from the GDP.
Exactly.
One more question, Dr. Paul, and we'll wrap this up.
Gold was up strongly today, up over 2% the last time I checked.
Maybe it's even more by now.
What are your thoughts on that?
Well, people should go to gold when there's chaos in the markets, and they did.
It's actually up the last time.
I looked 2.5%.
It's a reflection of the dollar being down, but it's also a reflection of people going to safety.
And though I had been instructed while in Washington that gold is not money, the world still thinks it is.
A lot of central banks, probably our government, still thinks of it as gold.
They still cling to some gold.
So it is a haven.
People go to gold.
What I find interesting is they went to gold because we get a very, very weak report, which means they won't raise interest rates.
They're going to lower interest rates, which means they're going to print more money and printing money, you know, like when they did QE, every time they did a QE, it bumped gold out.
So it's the idea that the economy is weak.
Government's going to print money and gold goes up.
And the one thing that people don't realize, if they're protecting themselves with gold, you can protect yourself even if the economy is healthy.
It isn't healthy.
This is not going to happen.
Gold As a Haven00:01:24
Let's say this report would have been super, super positive that we're completely wrong.
There's no weakness in the economy.
We're going back to economic growth again.
There's so much money out there that they've already created, you know, very healthy economy that's more booming.
You know, they said we'd get what they want, a 2% rise in prices.
But believe me, gold is going to respond as it did in the 70s, you know, even with a superficial benefit to the economy.
That is not the case.
People are going to gold because they fear weakness and more inflation.
But nevertheless, I think gold actually protects people whether the economy gets very, very weak or the economy, for some weird reason, was a healthy economy and there was more productivity because there's so much money out there anyway, and they can't withdraw that money.
So it would be reflected.
But once again, I think people should pay attention to this report.
And hopefully more people will study Austrian economics and look especially at Murray Rothbard on what he's written about the Depression.
And Hans Sandholz is not as well known, but he wrote magnificently about the Depression.
And people should check into that.
And if they can't find literature to read, they ought to go to the Mises Institute to find their books.
I can't agree more with that.
That's what provides many of us with our real education in this world.