Quality of Life Indicators in Context by Hazel Henderson
USA Update: September 2016
Total nonfarm payroll employment in August rose by 151,000 after July’s rise of 255,000. June’s was revised down from 292,000 to 271,000. Job gains have averaged 204,000 per month over the past 12 months. The labor force participation remains at 62.8%, and as people returned to looking for jobs, this brought the unemployment rate back up to 4.9%, but 8.1% for African Americans. First quarter GDP increased by only 0.8% and increased at an annual rate of 1.4% in the second quarter of 2016. The recovery is still on track according to the 12-month averaged jobs added of 204,000. Labor market statistics are notoriously subject to revision. The number of unemployed now is still counted at 7.8 million people. There were 576,000 discouraged workers while the employment-population ratio was unchanged at 59.7%. Markets rebound in the USA after the “Brexit” vote by Britain to leave the European Union. The Bank of England lowered its interest rate .25% and will buy £60 billion of bonds to stave off recession. So we now expect the Fed to keep US interest rates unchanged. Wall Street absorbed the Fed’s long-awaited rate increase from zero in 2015 but markets in 2016 are still jittery due to global weakness, Europe’s refugee crisis, Brexit, US elections, still-turbulent oil markets and losses in fossil fuel stocks along with growing number of bankruptcies. Wall Street still misunderstands China’s Shanghai stock market – even though as in the USA, these markets resemble casinos and are not reflective of the real economies in China or the USA. Payrolls for average hourly earnings rose by 3 cents to $25.73 while the average for non-supervisory private sector increased by 4 cents to $21.64. Market players now focus more on the need for wage growth, recognizing that this is key to maintaining aggregate demand.
Wall Street is still focusing on the Fed and other central banks, China, oil prices and global GDP–measured growth, avoiding real world risks of water shortages and climate change as I reported in Risks! What Risks?. Central banks’ tools are exhausted as I discussed in Ben Bernanke and Milton Friedman Were Right: Helicopter Money or Qualitative Easing? and many calls for governments to step up with fiscal spending, particularly on infrastructure were echoed by the OECD. Financiers and media reporting daily roller-coaster volatility are still ignoring the destabilizing role of computers, algorithms and high-frequency trading’s many “flash crashes” and the need for Reforming Electronic Markets and Trading, now an official UN document. This Inquiry will now follow up for two more years on these issues and the disruptions to traditional finance by fintech and IT startups in which Ethical Markets continues to participate (see my forthcoming “FINTECH: The Good and Bad News for Sustainable Finance”). The USA recovery is still unevenly shared as I note in “Facing Up to Inequality”. Polls found the economy still the top worry of voters as well as the growing inequality gap between Wall Street and Main Street, with these anxieties driving much of the election debate. For example, they are concerned as to what extent corporations are fair as found in the survey by JUSTCapital, founded by hedge fund executive Paul Tudor Jones, who announced recently that his firm will lower its fees.
It has been difficult to find information on government jobs, but they are now included in the main BLS summary. And in July governments, mostly local, added 38,000 new jobs, mostly for teachers. Losses of government jobs are key to understanding the state of the recovery. Total government jobs in August 2016 are estimated 22,213,000. We report on these government jobs to correct misstatements by some politicians that “government doesn’t create jobs – only the private sector creates jobs.” Despite the Republican victories in the mid-term elections, with the lowest voter turnout since World War II, uncertainty in Congress and the unprecedented political shifts among voters will likely continue through this 2016 election season. Trade issues are in focus for voters and both parties acknowledge the plight of those dis-employed by corporations offshoring jobs. As well as US trade deficits; in July at $44.5 billion and June imports were $227.7 billion while exports skill lag. Read more