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Fed Won't Taper If They Read TrimTabs' 2013 Report: Only 114K New Jobs Monthly?

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Many analysts expect the Federal Reserve Board to announce at its Dec. 17-18 monetary policy meeting a decision to "taper," the code word for slowing the pace of its $85 billion monthly bond purchases. The Fed would make such a decision based on its belief that the employment situation in the US is improving.

The Fed's supposed rosy notion about the job market comes largely from reports compiled by the Bureau of Labor Statistics. According to the BLS, in November the US created 204,000 new jobs and the unemployment rate dropped to 7%.

However, before the Fed initiates any new monetary policy based on the BLS November jobs numbers, it might want to consider the recent jobs report published by California-based TrimTabs Investment Research.

TrimTabs, considered by many economists the most accurate source of new jobs numbers, claims that only 115,000 positions were created in the US in November. In fact, Trimtabs CEO David Santschi said, the US has been creating an anemic 114,000 per month for all of 2013, far fewer than the 150,000 jobs per month number in 2012. TrimTabs counted only 91,000 jobs created in October.

TrimTabs bases its employment estimates on the company's analysis of daily income tax deposits of all salaried U.S. employees to the U.S. Treasury. The BLS unemployment rate reflects a calculation that excludes those in the labor force that are underemployed or have become so discouraged they quit looking for work.

According to University of Maryland economist Peter Morici, when we add in discouraged adults and part-timers who want full-time employment, the unemployment rate is 13.8 percent, not the BLS estimate of 7.0%.

TrimTabs CEO Santschi says his company's employment numbers clearly demonstrate that “The American jobs machine is stuck in low gear despite billions of dollars per day in fiscal and monetary stimulus.” According to Sanstchi, “Employment growth has been below 200,000 jobs in every month this year.”

Clearly, the US economy is still in a quagmire. We are becoming a "part-time nation," as a generally recessionary economy and Obamacare mandates discourage employers from creating full-time jobs. According to the survey of households, between September and November a paltry 83,000 people became employed, but the number of people not in the labor force during that period rose by an eye-popping 664,000.

Most disheartening is the growth in the number of Americans without jobs. As of November 2013 102 million working age Americans are either classified as officially unemployed or not in the labor force at all.

Certainly, there are reasons for the Federal Reserve to slow down and even eliminate its capricious money-printing operation, which many refer to as QE-Infinity because of the open-ended nature of the Fed's bond-buying. This version of QE is helping promote dangerous asset bubbles in the financial and real estate markets. In addition, the US will eventually have to pay the inflationary piper when all of that newly-printed money finds its way into the economy's blood stream.

But the Fed should not base the decision to taper on the questionable assumption that the US employment market is returning to health. Data from TrimTabs and other research sources paint a stark picture of a struggling economy plagued by persistently high unemployment.

Clearly, economists, government planners and media talking heads must start leveling with the American people, and with themselves for that matter, about the true state of the US economy. Only then will we be ready to take the bold steps necessary to get the country back on the road to economic growth and prosperity.


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