New Jobs Numbers: Recession Vs. Manipulated Boom, Marc Faber on QE3, and The Judge Gives the Austrian School Some Much Deserved Mainstream Attention

The new jobs report is being met with all sorts of speculation.  Is the slight drop in unemployment a good thing?  Does it not reflect all the data?  Are we at the beginning of another manipulative boom?  Or are we still about to bust?

Robert Wenzel is claiming victory:

It didn't take this morning's unemployment numbers for me to understand that we are not going into a double dip recession, that the source of current problems is in Europe and that the bond market will be in trouble, but today's job numbers are helping a few see the light.

From the Wall Street Journal:

–Wages rose 0.4%, double the consensus, 0.2%. This is a relief. We were always deeply suspicious of the June numbers because the seasonals were so savage, and we expected both a rebound in July and an upward revision to June. The July seasonal factor was almost identical to last year. – Ian Shepherdson, High Frequency Economics, Ltd.

–The payroll gain was the strongest in three months and reasonably broad based and there were upward revisions in payroll growth to the prior two months. There is better news on manufacturing in the gain in hours worked and our proxy for wage and salary income rose by 0.5%, which is good news for consumers. This report is very important for investors because the equity market had finally caved in with a 12% drop from the highs and fear…had replaced complacency. We were looking for a better entry point on equities and now we may have it. For bonds this is bad news as investors may look to put more risk on and as the gain in payrolls likely squashes the hopes of some for QE3. –RDQ Economics

–All in all, today’s numbers may quell recession anxiety at the margin – in our judgment, the real source of recession risk is more about European debt contagion than US domestic fundamentals (which, for now, are consistent with sluggish growth, not recession). –Jay Feldman, Credit Suisse

Mish has a different point of view and looks at the drop in the labor participation rate:

Here is an overview of today's numbers.

• US Payrolls +117,000
• US Unemployment Rate -.1 to 9.1%
• Participation Rate -.2 to 63.9% accounting for drop in unemployment rate
• Actual number of Employed (by Household Survey) fell by 38,000
• Unemployment rose by 156,000
• Those dropping out of the labor force rose by 374,000
• Civilian population rose by 182,000, Labor Force declined by 193,000
• Average Weekly Workweek was unchanged at 34.3 hours
• Average Private Hourly Earnings Increased by 10 Cents
• Government employment decreased by 37,000 - a genuine bright-spot

Many of those millions who dropped out of the workforce would start looking if they thought jobs were available. Indeed, in a 2-year old recovery, the labor force should be rising sharply as those who stopped looking for jobs, once again started looking. Instead, the labor force is not expanding at all.

Were it not for people dropping out of the labor force for the past two years, the unemployment rate would be well over 11%.

So which is it, are we in a manipulated boom or on the verge of more contraction?  Truthfully, I have no idea.  I am very new at this and the monetary times we are living in are very unprecedented.  What happens from here on out will show how a system of competing fiat currencies on a global level really works.  Can one country's central bank inflate to drive economic growth when there is chaos in other major industrialized countries?  We are definitely going to find out.

Marc Faber has weighed in on yesterday's stock/equity bloodbath on Bloomberg:

"next week will be important to see if Bernanke is a true money printer or an amateur, and if he is a true money printer he will start printing soon."

Faber is right, if Bernanke turns the printing press on again, it will prove that he genuinely thinks that printing greenbacks drives economic growth.  His whole reputation could very well be set in stone next week, I am already buying silver again.

I will end with Judge Napolitano's great summary of the Austrian school he gave on his show last night:

I will be in D.C. for a week starting tonight, so posting will be minimal, if done at all.