Yves here. Ilargi is mighty vexed by the unseemly display of optimism in the media over today’s jobs reports, since the continuing cheerleading is every more at odds with the outlook for most consumers and businesses. It’s easy to view this chipper barrage as a mainstay of the financial media, but as Ilargi implies, this looks like an effort to redefine collective expectations downward, so that ordinary citizens are conditioned to see the “new normal” of a tepid recovery as the best they can expect.
By Raúl Ilargi Meijer, editor-in-chief of The Automatic Earth. Originally published at Automatic Earth
Oh yeah, sure, optimism is oozing from every single one of America’s pores. Or so they’ll have you believe. 281,000 new jobs says the ADP report, most since December 2012. Of which small business added 117,000 and medium sized business 115,000. And the media are just besides themselves with joy. Shame that the markets react lukewarm at best. Then again, they do better the worse the news gets, all they reflect anymore these days is the level of distortion and convolution that they obey (or is that the other way around?).
One might be inclined to think US small and medium business owners were so busy hiring those new employees that they had no time to read last month that US GDP plunged that -2.96% in Q1. But maybe that’s not quite true, because three weeks ago, the National Federation of Independent Business issued this news release:
NFIB Optimism Index rose 1.4 points in May to 96.6, the highest reading since September 2007. However, while May is the third up month in a row, the Index is still far below readings that have normally accompanied an expansion and there have been similar gains in the past that haven’t panned out in this recovery period. Five Index components improved, one was unchanged and four fell, although not by much.
“May’s numbers bring the Index to it’s highest level since September 2007. However, the four components most closely related to GDP and employment growth (job openings, job creation plans, inventory and capital spending plans) collectively fell 1 point in May. So the entire gain in optimism was driven by soft components such as expectations about sales and business conditions,” said NFIB chief economist Bill Dunkelberg. “With prices being raised more frequently in response to rising labor and higher energy costs it is clear that small businesses are unwilling to invest in an uncertain future. As long as this is the case the economy will continue to be “bifurcated”, with the small business sector not pulling its historical weight in the GDP numbers.”
‘The entire gain in optimism’ was based on nothing but .. optimism bias. That news release does not make small busniess sound anywhere near as optimistic as today’s news reports. How you get from that to a way above expectations hiring spree is not immediately clear. Isn’t it perhaps true that America is so desperate for that recovery to finally materialize that it’s now damn the truth and the torpedoes time?
Things like this from Bloomberg, written earlier today before the ADP report came out, sound as if they’ve been written solely to create a mood in the country. Some people tell some survey they plan something. Thing is, how do you get from there to journalism?
About 34.8 million people plan to drive 50 miles or more from home during the five days ending July 6, up from 34.1 million last year and the most since 2007, AAA, the biggest U.S. motoring organization, said June 26. The travel recovery is boosting sales for hotels and attractions, a sign that consumer confidence and consumer spending are on the mend, said Mark Zandi, chief economist at Moody’s Analytics. “Stronger business travel and tourism is a very good barometer of the health of the broader economy,” Zandi said. “Spending on travel is more discretionary and expensive. The revival in travel is thus a good sign that the economic recovery is gaining traction.”
What recovery? How is -2.96 Q1 GDP growth a recovery? In what universe? This next one is also from Bloomberg and written before the ADP report came out:
Industries from construction to autos to oil and gas are increasing jobs as growth accelerates after a harsh winter stunted business. As some sectors, such as floor retail sales, have yet to rebound and wages have been kept in check, the recovery is likely to be a steady climb rather than a boom, according to Jeffrey Joerres, executive chairman of Manpowergroup Inc. Nonfarm payrolls may rise by 215,000 in June, which would mark a fifth straight month of increases topping 200,000, according to the median of 89 economists. That also would be the longest streak of monthly gains since September 1999-January 2000. [..]
The U.S. economy is forecast to accelerate after year-on-year growth slowed to 1.5% in the first quarter when severe snowstorms battered the U.S. and kept customers away from stores, shut factories and gummed up transportation of goods. With consumer spending still tepid, companies aren’t hiring in anticipation demand will rise, as in other recoveries, Joerres said. Instead they are they are expanding when they have orders in hand, he said. “We’re not seeing wage inflation at the rate you would think and we’re not seeing increased hours worked at the rate you would think,” said Joerres, whose firm has more than 400,000 clients worldwide.
What is this, a charm offensive? “Year-on-year growth slowed to 1.5% in the first quarter”? You sure that’s all? We have numbers that say otherwise. Plus, wages are not rising, hours are not increasing, but still ‘U.S. Companies Show Broad Recovery as Hiring Pace Surges’? Got a sneak peek at the ADP numbers perhaps?
I can’t help wondering what a reporter or editor expect from publishing nonsense like this. What use is it exactly to make people feel better about a lousy economy? It only lasts for a day. Factory orders just come in, down 0.5%. Guess they’re going to lay off all those 281,00 new hires again over the summer. The thing for me is, I’m getting so tired of all this empty fluff.
What I would want to see from well-paid journalists at Bloomberg and other main media is research into the effects of QE on the US economy, what the price is the American public has to pay to have stock markets rally to new records, what those markets would look like without QE, what home prices are expected to do without it, what the effects of rising interest rates will be on the man in the street and his home in that same street. And don’t go ask the usual expert suspects at Bloomberg or Reuters, they’re the most biased clowns in the crowd.
We live in the age of triggering responses from people’s unconsciousness, where they are most vulnerable, both individual and collective, almost 100 years after Freud and his nephew Edward Bernays, for very different reasons, figured out how to do that. The best proof we live in that age is probably that we never talk about it.
This means that unless you want to be a clueless victim of advertizing and other, more sinister, sorts of manipulation, you need to be awake and alert. And even then. And what better place to start than to write to your Congressman and to your newspaper and tell them you’re a grown up and you can take quite a bit of truth, and if they don’t stop incessantly bullshitting you, you’re not going to vote for them or buy their paper anymore.