Initial jobless claims unexpectedly rise

          Experts are constantly being “surprised” that the economy is not supporting more jobs. This is like a weatherman not expecting freezing temperatures in Chicago in the coming winter. These experts view are myopic. Some economists know that before the economy will create real jobs, the government must reduce its burden on the manufacturing sector. The idea that American can survive on a service economy is discredited.

          Notice how there is not a word in the cited article about in which sector of the economy the jobs were lost.

          The economy cannot survive on new home construction. Those homeowners have to have jobs. If a new home is purchased by a new government employee shouldn’t that fact be considered before the stock market prices rise? It’s not like government employees produce wealth in the economy. Someone who is working has to support those government employees. A datum showing an increase in new home construction permits does not necessarily tell a story of success.

          Job numbers also do not tell the entire story. New jobs in the steel or coal industry are one thing. New jobs in the department of energy are another. Wouldn’t you agree?  What does it tell you when you read this type of commentary: “Many economists say the four week average of claims will need to fall to below 425,000 to signal that the economy is close to generating net job gains.” What is magic about 425,000? Was that a number that some computer program came up with? Perhaps it is correct, but wouldn’t you like to know why?    

          And when you read that the Gross Domestic Product [GDP] has increased, wouldn’t it be nice to know in what sector? Manufacturing represents only 11% of the GDP and provides jobs for only 12 million Americans that pay 20% higher then the national average. Furthermore the GDP is misleading and of dubious value because it sums up the dollar value of all final goods and services “sold in the US” in a given year. The GDP takes into consideration goods manufactured in China and sold in the US. Those goods did not provide domestic jobs. Also since the GDP is a measure of final products it leaves out intermediate stages of production. Wouldn’t it be nice to know the value of raw materials used in production that were imported from foreign sources? For example the US produces about 100 million tons of steel, while China produces 500 million tons. If the GDP doesn’t compute from which source steel used in construction came, it is entirely possible that while the GDP is the same, industry has consumed less domestic steel, and therefore shed jobs from that sector. So the GDP is just one factor, and not a very good one to determine a trend.

          A much better way of forecasting the future in the long run might be to examine the trend in manufacturing and what multinational corporations are doing about moving facilities out of the country and assess the long term consequences. But obviously the stock market day to day looks short term, like a weatherman telling us what the temperature will be tomorrow, while the seasons change and make drastic changes that are inevitable based upon a much broader perspective.