Last week, the United States Labor Department released its monthly jobs report for August. The jobs figures suggested a bleak economy, a weak recovery and an unemployment rate of 7.3 percent. All of these statistics painted an uninspiring portrait of the nation’s overall economy, including a six-month job average trend of 160,330 per month.
The Federal Reserve continues to state that it will begin to taper its quantitative easing, bond-buying initiative in the near future. However, it could be difficult for the central bank to do so considering that it wants to see job creation above 200,000 each month before it makes a decision to ease back its inflation-inducing program.
Service sector jobs made up for most of the job additions and a boost in hiring at local schools assisted in the increase of total public sector employment. Meanwhile, part-time workers seeking full-time employment stands at 13.7 percent and there were 866,000 discouraged workers last month.
What was most interesting about the jobs report is the revisions for June and July. The government revised July’s payroll gain down by 58,000 to 104,000 and June’s payroll gain by 16,000 – this could mean the exact same thing for the month of August at anytime this year.
Essentially, what this means is that a large bulk of the jobs being created are part-time and service-related.
According to Peter Schiff, president of Euro Pacific Capital, the paucity of a jobs recovery is proof that QE has failed to work and continue doing so will just hurt the economy even more in both the short- and long-term. He says that the “devil is in the details” and that the media as well as the Obama administration will turn this report into positives.
In addition, the reason why the unemployment rate decreased was not because Americans found jobs it was instead due to the unemployed leaving the workforce entirely due to not believing there are jobs available.
Schiff explained that Wall Street sees the jobs numbers as weak but also will serve as an advantage to them because they realize that the Fed can’t scale back QE and thus end the stimulus.
“The weak jobs data would prove, it’s evidence, that QE isn’t working. We’ve been doing QE for five years. If it hasn’t worked yet, why should we keep doing it?” explained Schiff. “How about it isn’t has worked so let’s stop doing it? How about the economy hasn’t grown, we haven’t had a real good job creation in five years? Maybe the stimulus is a sedative; maybe the economy is sick because the stimulus is toxic. Maybe what we should do is stop the stimulus and maybe that will revive the economy.”