Posted by Curt on 2 February, 2022 at 2:51 pm. 9 comments already!


by sundance

The business and financial wires are melting down today as ADP Payrolls, the nation’s largest private sector payroll providing service, releases data from January showing a drop of 301,000 jobs. [ADP Raw Data Here]  
The financial, economic and business pundits are completely caught off guard and using the words “shocked”, “unexpected” and “surprised,” within their analysis. These employment numbers just don’t align with an economy growing at 6.9%, as measured by the Bureau of Economic Analysis (BEA). However, for CTH readers who have carefully scrutinized the economic claims and looked at the bigger picture through the prism of kitchen table checkbook economics, these results are not a surprise.
Every sector of the employment picture on Main Street USA is hit. The pundits, following the narrative first seeded by the White House on Monday, are pointing to Omicron as the justification inside their review. That’s nonsense. For the better part of seven months these same pundits first claimed Delta, then shifted to Omicron as a way to explain the structurally weak economy. All of that is nonsense.
What we are witnessing are the outcomes of massive inflation not hitting the labor market. A drop in demand, and a subsequent drop in the employment of goods and services, is an unavoidable outcome of inflationary pressure on wages.
Let me say it again, on a macro level, natural consumer DEMAND has dropped – we are only now starting to see it surfacing in the statistical measures.
This is why White House spokesperson Jen Psaki made that weird statement on Monday.
Given the nature of how heavily manipulated the government institutions are, there’s a strong likelihood the Bureau of Labor and Statistics have been surprised by their January employment polling results. That internal tremor, a concern amid the political tribe, is then conveyed to someone, who then relays the warning to the White House economic team…. and that’s how Jennifer Psaki received the briefing material last Monday.
The real dynamic inside the economy has been hidden by federal spending, bailouts and payroll support. However, that spending has contributed to the inflation that is creating the need for federal subsidies. We are in a circular economic argument created by White House economic policy.

(Reuters) […] Economic growth slowed in January, with an Institute for Supply Management survey on Tuesday showing its measure of national factory activity falling to a 14-month low.
The economy grew at a 6.9% annualized rate in the fourth quarter, helping to boost overall growth in 2021 to 5.7%, the strongest performance since 1984. Growth estimates for the first quarter are mostly below a 2.0% rate.
According to the U.S. Census Bureau’s Household Pulse Survey published in mid-January, 8.8 million people reported not being at work because of coronavirus-related reasons between Dec. 29 and Jan. 10. This has left some economists bracing for a decline on Friday in the nonfarm payrolls count for January.
According to a Reuters survey of economists, nonfarm payrolls likely increased by 150,000 jobs last month. Estimates range from a decrease of 400,000 to an increase of 385,000. The economy created 199,000 jobs in December, the fewest in a year.
The White House has been frantically trying to prepare the nation for a disappointing payrolls number, with several officials offering a preview of the report. (read more)

The employment situation has absolutely nothing to do with Omicron. However, Omicron provides a plausible cover story so long as people believe the propaganda pushed by financial media trying to protect the white house.

The economy doesn’t go from 6.9% growth in December to ZERO growth a few days later without something substantive happening in the background. My guess is the inventory buildup, cited by the Bureau of Economic Analysis in December, was the result of a massive drop in demand that took place in the three previous months.
The inventory and inflation driven inventory evaluation that helped inflate the metric of the Gross Domestic Product, was not the result of the supply chain coming back to normal. I will bet a donut the inventory buildup was specifically because demand collapsed.
My view of that situation is supported by the historic drop in productivity that was noted in the last half of 2021. The federal spending, and the federal subsidies for businesses and corporations to retain employees, ran past the period where payrolls would have naturally contracted due to the drop in demand.
If I am correct, the employment situation was artificially influenced, because interventionist COVID spending/bailouts allowed payrolls to be covered, and employees to remain on the payroll register, during a time when they should have been dropped if natural sales/profits were responsible for filling the payroll accounts of companies. This would explain the macro drop in productivity while macro employment was retained.
The natural outcome of that viewpoint is…. When the federal deposits into the private sector payroll accounts dry up, employers eventually drop employees.
That rather dramatic scenario is enough to trigger the BLS to freak out when they did the payroll polling.


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