Why We're Doomed... First Chart Right Side Says It!

http://www.zerohedge.com/news/2017-09-01/why-were-doomed

Why We're Doomed...




[size=10]by Tyler Durden
Sep 1, 2017 8:59 AM 
Authored by Charles Hugh Smith via OfTwoMinds blog,
The point is the present system cannot endure.
Despite all the happy talk about "recovery" and higher growth, wages have gone nowhere since 2000--and for the bottom 20% of workers, they've gone nowhere since the 1970s.

Gross domestic product (GDP) has risen smartly since 2000, but the share of GDP going to wages and salaries has plummeted: this is simply an extension of a 47-year downtrend.

Last month I posted one reason Why We're Doomed: Our Economy's Toxic Inequality (August 16, 2017). The second half of why we're doomed is stagnant wages. Why do stagnating wages for the bottom 95% doom our status quo? As I noted yesterday inWhy Wages Have Lost Ground in the 21st Century, our system requires ever-higher household incomes to function--not just in the top 5%, but in the top 80%.
Our federal social programs--Social Security, Medicare and Medicaid--are pay-as-you-go: all the expenditures this year are paid by taxes collected this year. As I have detailed many times, the so-called "Trust Funds" are fictions; when Social Security runs a deficit, the difference between receipts and expenses are filled by selling Treasury bonds in the open market--the exact same mechanism ther government uses to fund any other deficit.
The demographics of the nation have changed in the past two generations. The Baby Boom is retiring en masse, expanding the number of beneficiaries of these programs, while the number of full-time workers to retirees is down from 10-to-1 in the good old days to 2-to-1: there are 60 million beneficiaries of Social Security and Medicare and about 120 million full-time workers in the U.S.
Meanwhile, medical expenses per person are soaring. Profiteering by healthcare cartels, new and ever-more costly treatments, the rise of chronic lifestyle illnesses--there are many drivers of this trend. There is absolutely no evidence to support the fantasy that this trend will magically reverse.
Costs are skyrocketing and the number of retirees is ballooning, but wages are going nowhere. Do you see the problem? All pay-as-you-go programs are based on the assumption that the number of workers and the wages they earn will both rise at a rate that is above the underlying rate of inflation and equal to the rate of increase in pay-as-you-go programs.
If 95% of the households are earning less money when adjusted for inflation, and their wealth has also declined or stagnated, then how can we pay for programs which expand by 6% or more every year?
The short answer is you can't.
The budgets of state and local governments also expand every year as citizens demand more services, infrastructure requires costly maintenance and upgrades, and the overall costs of providing government services rises (soaring healthcare premiums are a major driver of higher government expenses). How can households pay higher property and sales taxes if their incomes are going nowhere?
Stagnant wages = stagnant income tax revenues.
Then there's the consumer economy that depends on ever-higher consumer spending. If wages are stagnant, how can households spend more money? The conventional answer is: we'll blow asset bubbles in stocks, bonds and housing, and households can spend this newfound wealth.
Nice theory, but only the top slice of American households own enough of these assets to matter. Feast your eyes on these two charts of skyrocketing income and wealth inequality. This chart shows that the majority of income growth is now concentrated in the top 1/0th of 1%, and most of what's left has gone to the top 5%. This is the only possible outcome of financialization and central-bank inflated asset bubbles.

Here's another look at the same dynamic, but excluding capital gains, which flow to those who own most of the assets, i.e. the top 1%: the bottom 90% lost 10% in the decade 2002-2012, the top 5% gained 6% and the very top of the wealth-power pyramid, the top 1/100th of the 1%, gained 76%.

The conclusion is sobering: wages/salaries are no longer an adequate means to distribute income or paid work. Our system is broken at the deepest levels--not just economically broken, but socially broken as well. Clinging to this broken model and filling the widening gap between the super-wealthy and everyone else with more debt will doom the system.
This is why I've proposed a new way to organize production, consumption, work and income in my book A Radically Beneficial World: Automation, Technology & Creating Jobs for All.
The point is the present system cannot endure. Borrowing trillions of dollars to paper over this failure won't work for much longer. We need a new system, or we're well and truly doomed.[/size]

http://www.zerohedge.com/news/2017-09-01/where-august-jobs-were-who-hiring-and-who-isnt


Where The August Jobs Were: Who Is Hiring, And Who Isn't




[size=10]by Tyler Durden
Sep 1, 2017 10:25 AM[size=13]As expected, last month's one-time, outlier surge in leisure & hospitality, and education & health jobs was not only revised lower, but is fully gone in the month of August. Furthermore, while according to the original July report not a single category had lost jobs, that is no longer the case as the chart below shows, with what the DOL now admits were losses in government, construction, retail and information jobs.
So what happened in August? There were several notable observations: as SouthBay Research points out, the recent surge in Leisure and Hospitality jobs has hit a brick wall, barely growing in August, as consumer spending on recreational activities has peaked. Furthermore, low paid retail jobs continue to stagnate as the industry implodes, offset by a surprise rebound in mining and logging.
Another surprise observations was the completely fabricated and patently untrue jump of 13,000 jobs in auto payrolls. This ridiculous number will be promptly revised lower next month as it comes at time when GM and all other OEMs are either furloughing or slashing payrolls, as several companies have announced extended factory shutdowns. With the Harvey hit, we expect this weakness to persist in coming months.
Next, as Southbay also notes, Association & Membership Payrolls continue their surge: +13K in August.  Curiously, this month saw greater enrollment in clubs than the entire year for almost every year since the recession ended, thus invalidating the credibility of the number.

There was a silver lining: while the pace of job creation slowed notably, the jobs added were of the higher paying variety:
[/size][/size]

• Professional Services (+39.9K): Strong white collar hiring (technical services +22K) offset rather limp temp worker hiring.
  
  
• Manufacturing (+36K): Driven entirely by the above-noted surprise jump in Auto payrolls boosted this sector
  
  
• Construction (+28K)  Not surprising given continued robust real estate demand
  
  
• Health care (+20K) To be expected as the US population ages ever faster; big job increases for physicians (+7.5K) and hospital (+6.4K) hiring.
  
  

[size][size]
Curiously, the strongest job category of the "Obama recovery", waiters and bartenders, also known as "employment in food services and drinking places" was changed little in August, adding only 9,000 jobs in the past month, after a whopping increase of 53,000 in July as the US restaurant recession finally comes home to roost (and force a sharp slowdown in restaurant hiring). If this sector, which has contibuted the vast majority of marginal jobs over the past 5 years is in peril, the next recession has to be just around the corner.
But going back to the key problem area identified by SouthBay, we note that consumer spending has peaked:
[/size][/size]

• Leisure & Hospitality was flat (as expected). Restaurants were reporting sluggishness
  
  
• Retail was flat and that's a bad sign going forward.  Combined clothing+ department store payrolls were flat - despite announced layoffs and store closures.  That means these layoffs have are still in the pipeline and will be a drag on the next few months' payrolls.
  
  

[size][size]
Summarizing all of the above, here are two charts that breakdown job creation in July and August by key sector...
.zerohedge.com/sites/default/files/images/user5/imageroot/2017/08/12/jobs by sector Aug 2017.jpg][/url]
... and a more detailed breakdown from Bloomberg:
.zerohedge.com/sites/default/files/images/user5/imageroot/2017/08/12/jobs detail bbg.jpg][/url]
Keep in mind: none of the data above includes the effects from Hurricane Harvey, which according to estimates, is expected to wipe out at least 50-100K jobs from the September payrolls report.[/size][/size]

August PMI Shows "Renewed Stuttering Of US Manufacturing Economy" But ISM Surges To 6 Year Highs

http://www.zerohedge.com/news/2017-09-01/august-pmi-shows-renewed-stuttering-us-manufacturing-economy-ism-surges-6-year-highs


[size=10]by Tyler Durden
Sep 1, 2017 10:09 AM[size=13]With soft survey data scrambling the macro traders minds currently (China manu good, services crash; Canada bad - despite surging GDP?), all eyes swing to US data this morning with Markit's Manufacturing PMI weaker than July (though beating expectations modestly) with a "renewed stuttering of the manufacturing economy during August." However, for those who need some good news, ISM's survey of the same manufacturing economy saw them the most exuberant since April 2011!
Manufacturing PMI printed slightly above the flash reading of 52.5 but at 52.8, it is well down from July's 53.3. Under the hood, production levels increased at the weakest rate since Brexit (June 2016), and as production weakened, prices surged - On the price front, cost burdens increased at the fastest rate since April and output price inflation was the strongest in three months. Panellists noted that input cost inflation was driven by higher raw material prices, especially steel and electrical components. Firms generally passed these rises on to clients through increased factory gate charges.
But you can ignore all that because ISM's Manufacturing survey exploded higher to 58.8 - above all economists' estimates - to the highest since April 2011...

This surge comes despite a drop in New Orders (and new export orders) and plunge in customer inventories.
Employment, however, spiked to its highest since June 2011.

Commenting on the final PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:
[/size][/size]

Quote :

“Although still above the 50 ‘no change’ level, the decline in the PMI shows signs of a renewed stuttering of the manufacturing economy during August. The latest reading indicates one of the weakest improvements in the overall health of the sector seen over the past year, and translates into disappointing signals for comparable official data.
 
“The survey brings more encouraging signs of improved domestic demand, however, with orders for both consumer goods and investment goods such as plant and machinery on the rise, boding well for the wider economy to continue to expand as we move through the second half of 2017.”

Additionally, Williamson warns...

Quote :

“The drop in the output index indicates that manufacturing could act as a drag on the economy in the third quarter, with exports dampening order book growth.

It appears so...