U.S. Economy: These Three Data Points Show Growth Has Stopped

Economic growth stoppedIf you think the U.S. economy is improving, this story says that, truth be told, it’s the complete opposite for the economy, as recent data suggest there is no growth.

U.S. Economy’s Jobs Market Tormented

In March of this year, only 126,000 jobs were added to the U.S. economy. That’s well below the increase of 264,000 jobs in the previous month, less than half the average of 260,000 a month over the last 12 months, and below the 250,000 jobs analysts were expecting. (Source: Bureau of Labor Statistics, April 3, 2015.)

Looking closer at the March 2015 jobs report, 6.7 million part-time workers who want full time work can’t find it. Another 2.1 million Americans in March were available and searching for work, but didn’t find a job. The worst part is that they are not counted as unemployed!

The unemployment number I really care about, the underemployment rate, stood at 11% again—this more accurate measure of the jobs picture includes people who have part-time jobs because they can’t find full-time jobs and people who have stopped looking for work.

Saying the very least, it seems U.S. economic conditions are anemic. It’s no wonder 46.2 million Americans, or about 23 million households, were on food stamps as of December of 2014, a number that hasn’t come down since 2012. (Source: U.S. Department of Agriculture, March 6, 2015.)

Between January and February 2015, real personal consumption expenditure in the U.S. (consumer spending on goods that last longer, like electronics adjusted for price change) declined 1.1%—the biggest decline since December of 2012! (Source: Federal Reserve Bank of St. Louis web site, last accessed April 7, 2015.)

So we have very poor jobs growth in March, almost 50 million Americans using some form of food stamps, and consumer spending now contracting. How can you call that economic growth?

Stock Buybacks Not Helping the Economy

Dear reader, aside from printing trillions of dollars in new money out of thin air, the Federal Reserve has kept interest rates at record-lows for far too many years. Public companies, instead of using their cash and borrowings to invest in their business (R&D, capital expenditures), used their financial resources for stock buybacks.

As a prime example, last week General Electric Company (NYSE/GE) announced it was selling its real estate portfolio for about $26.0 billion, while taking the money (and its existing cash, maybe even borrowings) to buy back $50.0 billion of its shares. How does that help the economy? It doesn’t. It helps companies push up their per-share earnings, which in turn pushes up their stock price, which in turn helps investors…not the economy.