Investor’s Business Daily editorialists aren’t impressed with Friday’s jobs report, nor should they be, and they tell us why.
In short, there should be almost 10 million more people working than are working (really more than 10 million after considering population growth) :
The share of working-age Americans with jobs — 58.6% — has barely budged since the bottom of the recession, and we’re still some 2 million jobs short of pre-recession levels. This is unique in post-World War II history. At this point in every other recovery, the job losses had long since been erased. On average, payrolls were 7.6 million above the pre-recession peak.
This is a serious problem at the grass roots, among job seekers and businesses that need a fully employed, well-paid middle class to fuel demand for their products and services. Main Street, in short.
Wall Street has a different take — and we say that simply to state a fact, not to make a moral distinction. Its fortunes rise or fall with the demand for financial assets, which may have a connection to the health of the broader economy.
Right now the stock market is riding a valuation wave generated by corporate earnings and monetary easing by the Federal Reserve. Profits can rise without much job creation — in fact, cutting jobs is one way to boost the bottom line when sales growth is sluggish.
And the Fed is, if anything, job-contrarian.
It has announced it will stop easing once unemployment falls to 6.5%. When that happens, stocks will start losing the crutch of ultralow interest rates that are putting competing investments, such as bonds and CDs, at such a disadvantage.
From the stock market’s point of view, Friday’s report was just the right level of mediocrity. It showed the economy wasn’t tanking, so companies can still make good money. And it showed the job market wasn’t likely to cross the Fed’s red line soon.
We certainly can’t complain when the stock market makes investors richer. But it’s hard not to see the irony when Wall Street showers its blessings on an administration that is hardly a friend to free-market capitalism.
When the Dow is up, it makes the party in power look good. It also draws attention away from the widespread economic pain that you don’t see on CNBC.
The Obama White House can talk all it wants about its commitment to a thriving middle class, but if the media ignore the real plight of the middle class and focus on the Dow, well, that works for it, too.
Related, at the Economic Collapse Blog: “They Are Murdering Small Business: The Percentage Of Self-Employed Americans Is At A Record Low”