Your future is trash.

   By Donna Cole


 Want to see the our economic future ? You don't need a crystal ball, just look in the garbage. Actually, you need to look at the number of rail carloads of garbage hauled as calculated by the Association of American Railroads. Economist Michael McDonough produced the following chart showing the correlation between waste carloads and GDP growth, and he used this methodology to predict the near 4% growth rate in 2010. (Credit to The Fix as my original source for this chart.)

 The easy answer to me for this correlation between trash and GDP is that the better the economy the more stuff people buy. When they buy new stuff, they throw out old stuff. In other words, the more money people have and the confidence to spend that money, the more garbage they produce. If you notice the direction of carloads of waste for the 3rd quarter, it's crashing. So, if this chart is right and GDP tracks waste shipping by rail, then it will prove the anemic growth over the last two years was just a Dead Cat Bounce and our economy is headed back into the trash can. (*Note, rail cars to haul trash are ordered ahead of time, meaning these rail cars are an indicator of the future. These orders are how they can project the 3rd quarter numbers. Tracking real GDP growth lags behind because it cannot be calculated until after the fact.)


 Here is more evidence of the president's policies trashing our economy, and the direction of these numbers add credence to the above chart. First, we have this story from AP (here via Businessweek);

 "The Commerce Department said Thursday that factory orders fell 0.5 percent in June, the third decline in four months."

"Orders for core capital goods, considered a good proxy for business investment, dropped 1.7 percent. Demand fell for heavy machinery, computers and autos. Orders for motor vehicles and parts fell 0.7 percent, the second decline in the past three months. Orders for machinery fell 2.1 percent, reflecting declines in demand for metal working machinery and electric turbines. U.S. manufacturing shrank for the second straight month in July, according to a survey by a trade group of purchasing managers."

"The recent softness in manufacturing activity and capital spending is likely to continue, at least for several more months," said Steven Wood, chief economist at Insight Economics.

 So, factory orders are down literally across every sector and this is now a four month trend. Why are these orders down ? Because people are not buying stuff, thus not creating as much trash either. But we were told that last month the economy added 163,000 jobs and this was proof the President's policies were working, right ?


 Well, those reports (and how the Democrats spin them) are misleading. Let's look at some "real" numbers. Here, NPR's Planet Money, hardly a conservative news outlet, explains that the 163,000 jobs gained number is bunk and in fact we lost jobs;

"Everyone (including us, NPR) is saying this morning that the U.S. economy gained 163,000 jobs last month. Strictly speaking, this is a lie."

"In fact, the U.S. economy actually lost 1.2 million jobs last month. There were 134.1 million jobs in June, and 132.9 million jobs in July. Why the massive gap between the number everybody is reporting and the actual number?"

"There are huge seasonal fluctuations in employment that occur in a predictable way, year after year. Retailers staff up before Christmas, and lay people off in January. Public school districts staff up in the fall — and let people go in July, after the school year ends."

"To account for this, the government releases "seasonally adjusted" jobs numbers every month. The basic idea is to correct for these predictable fluctuations."

 Wonkblog, a liberal economics blog, explains this further;

"The U.S. economy lost 1.2 million jobs between June and July. But that’s not how it got reported. When the Bureau of Labor Statistics released its jobs figures for July, it said the economy gained 163,000 jobs. So what gives?"

"According to the bureau (Bureau of Labor Statistics or BLS), the economy essentially lost 163,000 fewer jobs than one would’ve expected, given seasonal trends. That’s a sign of a (slowly) recovering labor market. So BLS reported it as a 163,000 gain in jobs."

 So, this widely reported job growth is actually because the country lost fewer jobs than expected. It is an error in the BLS's prediction model and doesn't correlate to real growth. The real indicator of job growth is the unemployment rate which ticked up last month from 8.2 to 8.3%. If job growth was really going in the right direction this number wouldn't be going the wrong way.


 This report from CNBC says that unemployment claims are rising (by.05% last week), but because they have gone up less than expected in the last month this is somehow positive news (Sort of like the President's "great" job growth numbers from July). When unemployment claims are rising it is never good news and correlates with the rising unemployment rate. However, this part of the story helps to understand the BLS's last jobs report;

"Weekly jobless claims rose less than expected last week, but the data continue to be influenced by distortions from seasonal auto shutdowns."

"Temporary plant shutdowns by automakers for annual retooling cause wide swings in claims data in July, which makes it difficult to get a clear picture of the labor market's health."

"The model used by the government to smooth the numbers for typical seasonal patterns has trouble anticipating the timing of the temporary closures and in addition, some automakers kept production lines running in July."

 The error in the BLS jobs numbers can be found here. Fewer summer layoffs in the auto industry because they are pushing their seasonal retooling layoffs into the fall, the BLS expected this to happen in summer. The CNBC story continues;

"John Challenger (CEO of firm that analyzes jobs numbers) cautioned that layoffs typically slow during the summer months, while the heaviest job cuts historically happen in the fourth quarter. "This may simply be the lull before the storm,'' he said."

 I found another interesting correlation in the jobs numbers and the GDP to trash chart in this employment chart from Wonkblog.

 Note the spike in jobs in early 2010. Those high bars were caused by hiring of Census workers and had nothing to do with private job growth (even Wonkblog admits this). This can be seen in that once the Census workers were laid off, the numbers went back negative. Now, look back at the GDP to trash chart and note the big spike in 2010. While some of that was pent up demand being released from the 2009 hole, much of it was caused by Census workers spending those paychecks. The two charts track together and prove this. In other words, those numbers are padded and not a true reflection of reality at the time.

 Some would argue that this jobs chart does show that things, while sluggishly, are moving in the right direction. We now know how the BLS calculates these numbers, and that while they may show a direction, whether or not they are good is based on estimates then hitting or missing those estimates. For most economists, anything under 200,000 is really bad and barely keeping up with population growth. So, how can we really calculate how many new jobs (or jobs gained) President Obama has created as opposed to new hires and things like people being called back from layoffs, teachers coming back from summer break, retiree replacement, etc ? (Just retiree replacement accounts for over 100,000 new hires a month.)


 For this we have to go to the folks at Political Math and a very simple to understand chart they have put together comparing Obama to previous president's job creation records. (Political Math is also using BLS numbers, just not the same ones that measure the monthly numbers. The BLS monthly jobs numbers come from a business survey, these job gain numbers come from a household survey. It is a combination of these two (at roughly an 80/20 ratio with some other factors added) in a complex equation that they use to come up with the overall unemployment rate.)

 To be fair, his term is not over yet, but do you see where President Obama fits in on this chart ? He is that little tiny block at the very bottom. Only 100,000 new jobs were created so far during his term. Even Jimmy Carter gained 10 million jobs. Another thing to take away from this chart is to look at the last few one term presidents, Ford, H.W. Bush and Carter. All had unemployment at 7.5% (or around it at the actual time of the election) and lost re-election.


 I read all the liberal economics blogs and columnists, they would say President Obama doesn't really have much power to influence the economy. Then they would ask me what policies have been so bad and why ? I would answer that the President has whole lot of influence over the economy, and all of Obama's policies have been bad for it. Here is why.


 The most powerful force in a free market is confidence in the future. It affects everything from what groceries you buy to how much huge corporations expand or contract. A lack of confidence causes uncertainty. When people are uncertain about the future, they freeze. This causes growth to stagnate. The President and his policies have created a lack of confidence and with it uncertainty about the future. The economy will not grow until this changes.


 A few of these policy failures would be Obamacare, heavy regulation in the energy sector, and stimulus. Obamacare and heavy energy regulation have caused uncertainty in the business world because of their unknown future costs. Would you hire new workers or build a new store, or factory, if you had no way to project their costs going forward ? Stimulus was sold to the public by Democrats as our economic savior and it failed miserably (as all conservatives said it would). These are just a few reasons why people, from soccer moms to CEOs, no longer have confidence in the President's economic policies and they are frozen.


 So, Obamanomics has been an utter failure with no upside coming, and as long as President Obama sits in the Oval Office your future is trash in an economic dumpster created by him. (*Note to liberals. Sorry, you can no longer blame this on Bush.)