Here's a warning on the economy. When you look at the top line job numbers from today's BLS report, the story looks very strong. 336,000 non-farm payrolls, way above consensus expectations. Here's a little presidential crowing:
BIDEN: "This morning we learned the economy created 336,000 jobs in September alone. That means since I've taken office, we've created 13.9 million new jobs. We have the highest share of working age Americans in the workforce in 20 years. It's no accident. It's Bidenomics. We're growing the economy from the middle out, bottom up, not the top down. Bidenomics is leading the surge in unionized workers exercising their collective bargaining rights."
However, Joe, when you look under the hood, you find that the household survey, which produces the unemployment rate, only went up 86,000. What's more, most importantly, full-time workers actually fell 22,000. It was part-time workers rising 151,000 that was the bulk of the increase in jobs in September. Part-timers! Also, there were 123,000 more folks holding multiple jobs, no doubt because they can't make ends meet, living paycheck to paycheck.
These are signs of weakness, which is undoubtedly why the stock market actually rallied today, and fears of a Fed rate hike actually eased. Another point - the single biggest job increase category was government jobs, not private jobs. Another point to be made... over the past year or more, the biggest gain in the employment-to-population ratio comes from people 65 and over, not prime age workers.
I'm glad my peers are out there on the front line (Go get them!), but I'd like to see the younger crowd catch up. Another issue... production workers in manufacturing are back underwater in terms of affordability and what a day's pay will buy. Over the past 12 months, their wages have risen 4.3%, which is a fine number, but their hours worked have dropped almost 1%.
That's the slump in manufacturing. So, their income over the past year is up only 3.7%, which is equal to the last reading on the CPI. This is the soft underbelly and Achilles heel of the Biden administration of the past nearly 3 years – prices have gone up faster than wages.
That is why Mr. Biden's economics favorability rating is less than 30% with a disapproval approaching 60% and recall that during the Bidenomics era, grocery prices up nearly 20% and gasoline up 52%. That's the failure of his frenzied spending policies, his manic regulatory policies and his war against fossil fuels.
Meanwhile, home buying affordability, aka America's dream, is falling further and further off the table and out of sight. 30-year mortgage rates are now just short of 8%. They were near 2% three years ago. Housing starts are negative. Existing and new home sales are negative, but prices keep rising because of hundreds of different regulatory barriers.
Even with a positive number for August factory orders, the reality is year-on-year over the past 12 months, orders are flat and backlogs are negative. The economy is showing some resilience largely because corporate profits – the mother's milk of stocks and the lifeblood of the economy – continue to rise, at least through the spring and early summer. Remember, Donald Trump's corporate tax cut from 35% to 21% is permanent. Low taxes equal higher profit, but of course, Joe Biden, the anti-capitalist, the proponent of big government socialism, wants to raise taxes on all businesses and successful entrepreneurs. Take a listen to this malarkey:
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BIDEN: "When I was able to cut the federal debt by $1.7 trillion over the first two years, well, remember, when you talk about those 50 corporations that made $40 billion, weren't paying a penny in taxes. Well, guess what? We made them pay 30% to 50% in taxes, 50% nowhere near what they should pay and guess what? We were able to pay for everything and we end up with an actual surplus.
This here is pure malarkey. This is malarkey about corporate taxes, and malarkey-squared about budget surpluses. The guy is incapable of telling the truth about the economy. Fiscal year 2023 will see a budget deficit of $2 trillion or more. Mr. Biden is a bottomless Pinocchio. He is incapable of telling the truth. There ought to be a law about that. That's my riff.
This article is adapted from Larry Kudlow’s opening commentary on the October 6, 2023, edition of "Kudlow."
