The brazenly fraudulent economic data the U.S. government puts out each month would have us believe that inflation and unemployment are both pretty tame right now. Would that it were true!  In reality, “underemployment” is rampant, and, according to John Williams, a speaker at the recent meeting in New York of the Committee for Monetary Research and Education (CMRE), consumer inflation would be running at closer to 12 percent than the currently alleged 4 percent if it were calculated using the 1980s formula. Instead, we now get “seasonally adjusted” unemployment figures, and a “core” inflation rate, ex-food and -energy, that are about as believable as 1930s Kremlin data intended to validate Stalin’s Five Year Plan.

Productivity Hoax

By egregiously manipulating the inflation number each month, the government has produced another statistical fiction – i.e. “productivity growth” a number used by “Easy Al” Greenspan to persuade us that the economy was on the right track during his tenure. If this were true, though, and Americans were indeed as wealthy as the Fed chairman always liked to tell us we were, then why are so there so many working wives? And why, even with all those wives working, do Americans have no savings?  Oh, that’s right: Our savings, and most of our wealth, are vested in the homes that we live in (but which are mostly owned by mortgage lenders) -- the same homes that, on average, lost 15 percent of their value in the last year.

Regarding inflation, it doesn’t take a genius to figure out that the monthly CPI number is bogus. Anyone who has been to the grocery store or the gas station, or who has sent a check to a college bursar, or had a prescription filled, knows that consumer prices have been rising very steeply – more steeply, in fact, than at any other time since the 1970s.  But what about those mellow unemployment figures – statistics that would deign to suggest that joblessness is hovering around 5.6% even though the  U.S. economy is in a state of near-collapse.  Anecdotal evidence that the economy has nosedived is overwhelming at this point, even if the government’s numbers crunchers have miraculously kept us out of statistical recession. Talk to some retailers at the local mall if you don’t believe us -- or to friends who are realtors, consultants or lawyers.

Realty Business ‘Off’

We have more than a dozen friends who are realtors, and perhaps another dozen who are self-employed consultants of one kind or another, and although nearly all of them would tell you that business has fallen off significantly in the last six to twelve months, not a single one has turned up as an unemployment statistic; for in fact, self-employed workers cannot even file for jobless benefits. That means that if the income of a highly paid service worker were to fall by 50 percent, we would never hear about it from the Bureau of Labor statistics. The only evidence we'd have would come indirectly: Sales at pricier stores would start to dry up. Caribbean cruisers would sail half-full. Tax revenues in upper middle-class enclaves like Boulder, Colorado, would drop sharply. Casinos would start opening up more tables for $5 blackjack players, even on Saturday nights. Pricy restaurants would either close or cheapen their menus.

As far as we can tell, all of these things have been happening, and the changes seem, at least anecdotally,  to be waxing rather than waning.  This suggests that although unemployment has climbed only somewhat, the free-spending, highest-income workers who have long stoked the U.S. economy, and who are invisible to the government's statisticians, are hurting. There are probably millions of such under-employed workers now, given America’s extremely heavy skew toward service-sector jobs. And, by and large, they have been among the top earners in the work force. But literally tens of millions of them could be reduced to subsistence wages and they still wouldn't show up as unemployed. Keep that in mind the next time some bozo on CNBC points to “low” joblessness as evidence that this deepening recession isn’t so bad.

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