“THE ECONOMY IS SHRINKING AGAIN …”
By Robert Romano || One item that went largely unnoticed in June’s jobs report was a startling drop in the number of full-time jobs — a whopping 713,000 jobs were lost where the time of work is more than 34 hours a week.
In the meantime, the number of part-time jobs jumped by more than 1.1 million.
Meaning, the 0.2 percentage point drop in the unemployment rate to 6.1 percent was owed almost entirely to full-time workers taking on part-time work. Hardly a promising indicator.
Couple that with the 2.9 percent downturn in growth for the first quarter, and we’re on the cusp of another recession.
Which, in itself, would not be that surprising. The economy moves in cycles, averaging a recession once every 6 to 7 years since 1947.
Since the last recession was five years ago, we’re basically due for another one any time now.
Which is not good when you consider that since World War II, this has been by far the weakest recovery on record, in terms of growth, job creation, housing prices, and everything else.
That, despite the constant promises from the Federal Reserve that a robust recovery has always been right around the corner.
As recently as March 19, 2014, the Fed was projecting anywhere from 2.8 to 3 percent growth in real Gross Domestic Product (GDP) for the year. Its December projection for 2014 was 2.8 to 3.2 percent growth.
Instead, the economy is shrinking, again, at an annualized 2.9 percent rate.
To get back to just the low end of its original forecast, the economy will need to grow an average of 4.7 percent each quarter for the next three quarters. Good luck with that.
Accordingly, the Fed has reduced its growth outlook. Now, it only sees 2.1 to 2.3 percent growth for the year. Still, to get there even, we still need to see 3.7 percent growth each quarter for the next three quarters. Is anyone the least bit skeptical of this rosy outlook?
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