Quality of Life Indicators in Context by Hazel Henderson
USA Update: June 2016
Total nonfarm payroll employment in May rose by only 38,000 while downward revisions in April from 160,000 to 123,000 and Marche’s 208,000 to 186,000 were an unanticipated surprise. The Verizon strike lopped 35,000 off the May job totals. The labor force participation decreased to 62.6%, which means some 500,000 people left the workforce. This brought down the unemployment rate to 4.7%. First quarter GDP increased by only 0.5%. The recovery is still on track but seems now to be weakening. Labor market statistics are notoriously subject to revision and now, over the past 3 months, job gains have averaged 116,000 per month. The number of unemployed declined to 7.4 million people. There were 538,000 discouraged workers while the employment-population ratio remained at 59.7%. Markets in the USA sold off on these unexpected numbers and now expect the Fed to keep 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 5 cents to $25.59 while the average for non-supervisory private sector increased to $21.49. 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 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. GDP increased at an annual rate of 1.4% in the fourth quarter of 2015 after a 3.9 percent increase in the second quarter and 2.0 percent increase in the third quarter. 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.
It remains difficult to find information on government jobs, but they are now included in the main BLS summary. Continued losses of government jobs are key to understanding the state of the recovery. Total government jobs in May 2016 are estimated 22,089,000. 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. The politicization of the Supreme Court after the death of Justice Anton Scalia is also unprecedented and fueling deeper issues as in Time To Re-Balance The Corporate-Friendly Supreme Court and Aligning the Supreme Court with the US Constitution. Further adverse consequences beyond gridlock are continuing unrest across the USA over police brutality and shootings of unarmed African American citizens, unresponsive legal systems – all damaging the USA’s reputation worldwide. Similarly, the failure to invest in infrastructure repairs and modernization are widely reported internationally, and the USA lag in internet access and broadband ranks the USA at 28th worldwide behind many emerging economies. These and other issues are insufficiently debated in the election campaign, especially on the Republican side where personal attacks and uninformed rhetoric by Donald Trump, their frontrunner, now appalls our international allies and in media reports. Read more