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X22 Report is a daily show that will cover issues surrounding the economic collapse

Monday, January 27, 2014

By Michael Mccune: The Rant (US Government auditor for 16 years In Cheyenne, WY. -State of Union Will Change Words, Not Produce Results- (( to Have Michael send you the Rant to your Email contact Him Here (( mccrant@gmail.com))

State of Union Will Change Words, Not Produce Results

Despite Washington's political tinkering for the past 75 months, the economy is not improving. Tomorrow marks the State of the Union speech from President Obama, his fifth since taking office. Listen for the new catchphrase.

 

In the past, Obama has never left the campaign trail but his theme tomorrow will be a switch from "inequality" to a base of "opportunity. He expects to accomplish with words what he has been unable to do as president. He has found the phrases used in the past no longer motivate his base.

 

Take three news items from the headlines today on housing, jobs and food stamps and you will get a bleak picture of the economic outlook for America. Housing fell more than expected in December, dropping to a rate of 414,000 new-built homes annually. While companies are more upbeat about economic profits, they are not planning to hire. Food stamp use reached another all-time high but the surge in usage by college-trained, working-age adults sent alarm bells off throughout the markets.

 

The one sector Obama should be counted on to refer to is the stabilization of the U.S. bond market and the rally of the dollar against other currency. It is not a barometer of success for the dollar or the bonds but a clear indicator of how weak the rest of the world economy is. That is why trying to be the leader of the world rather than the U.S. has effectively neutered his agenda.

 

But the switch in tone from inequality to opportunity is doomed to failure unless he can lead a charge to reverse the current trends noted above. With an image of lying already in place, more unsupported claims by this Administration will probably make him the quickest lame-duck in U.S. history.

 

Since the Rant focuses on housing and employment as the top two indicators of the health of the general economy, the fact new home sales fell once again is disheartening. But the fact companies are reluctant to hire more people despite more profits is a real blow and provides tangible proof the various financial stimulus programs have not reached Main Street but stopped on Wall Street.

 

The Commerce Department revised November's new home sales figures downward from a 464,000 annual pace to 445,000 only to have to report December sales did not gain but slipped even more than expected. Throughout the late summer-early fall season, the housing sector seemed to be recovering with glowing numbers compared to the 2008 bottoms. 

 

Even with the additional gained, housing is nowhere close to being healthy. In 2006 new home construction hit nearly 1.3 million units. America is still adding people at more than 220,000 per month yet home sales continue to lag. Each home lost represents three man-years of labor.

 

The reason people aren't buying homes is most of them cannot afford the price. The disconnect in the housing sector is it is supported by no less than 23 types of mortgage/rent subsidy programs. The jobs market--at least in the private sector--is not. But with private companies reluctant to hire, those on the outside looking in are probably going to remain there.

 

Most company execs are not sure how the Affordable Care Act provisions are going to hurt them if they bring on new employees but almost all are uncertain how the Fed's announced tapering will affect them both short- and long-term.

 

The National Association for Business Economics released a survey which revealed 43% of company execs plan to raise product prices this year--about three in every seven. The NABE was practically giddy because that was the highest reported number in more than a year. The downside for the economy was even fewer thought they would be hiring. Thirty-seven percent of the respondents indicated they planned to hire new people this year--the same as in October but nine points less than November.

 

The NABE also cited the 6.7% unemployment rate as a positive factor. But take a real close look at unemployment. In 2006 the U.S., per Bureau of Labor Statistics, had 153 million jobs. That number is just over 144 million today. In 2006 the Census Bureau estimates the U.S. was just at 300 million population. Since then the U.S. has added almost 20 million people.

 

In 2006, with 153 million jobs and 300 million people, the unemployment rate was 5.4%. Today with nearly 320 million residents and only 144 million jobs (less than 100 million which are full-time) we are expected to believe the unemployment rate is 6.7%. This is adding to Obama's credibility problem.

 

But the final evidence of continuing economic regression comes from  the food stamp numbers.

 

The U.S. food programs paid out $80 billion last year. Most of the increase was in an area that was formerly part of the middle class--working age people with some college background. One in seven Americans now receive aid to keep eating.

 

The problem with the claim the economy is improving by citing increasing jobs is the number of working people on part-time or temporary jobs. Finally, as the Rant has been maintaining for years, the government is beginning to take notice of the discrepancy in job quality. Some economists are starting to argue having a job is no longer enough to determine self-sufficiency in today's economic reality. If this gains support, the manner in which the government figures "unemployment" will have to undergo another change as well.

 

Oddly, many people who have training or education to qualify for a job cannot afford to utilize their expertise because the fees to go through the testing process cannot be covered. One the one hand the bureaucracy doesn't count these people as unemployed or even under-employed but on the other, because they cannot get work for which the government trained them through various programs, the government has to feed them. The socialistic approach to education, long adhered to by this president, isn't working. 

 

Despite what Obama says or doesn't say in his State of the Union, despite how he changes language to try and rev up the old base by discarding worn-out language for new and despite the "official" data coming out of Washington his teleprompter will try to spin to the Administration's side, America's economic situation is not improving.

 

There is no air under the wings of America's economy plane. Without that lift, the government engine can run as fast as it wants and the plane won't leave the ground. Private America sector continues to get pinched by red tape it can no longer afford to complete.

 

The lack of improvement in the economy is finally starting to make inroads on the zeal of Obama's youthful bloc. The college students and young adults are listening with a doubtful filter or have given up listening altogether.

 

Five years into Obama's reign and the Administration still has no answers. WH Advisor Dave Pfeiffer brought up the first oldie of the hit parade Monday morning when he answered a question with "The economy we inherited was much worse than we thought." What you inherited doesn't matter after you've held the reins for five years. What you are doing will carry much more weight.

 

"I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man."--Thomas Jefferson

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