The latest US non-farm payrolls data shows that the US economy created 528,000 new jobs last month alone. That is against a forecast of 250,000, which would itself be more than required to employ the additional workers coming on to the market (around 90,000). In addition, the previous month's data, which was itself also high, was revised even higher, by a further 28,000, meaning that in total 556,000 new jobs have been created over the month. So much for all the talk about recession.
In fact, as I wrote recently, this puts into perspective the data showing that US GDP fell in the first two quarters of this year, and illustrates why GDP is not a measure of output, and not even a reliable measure of new value/revenues created in the economy. Its quite clear that with an average of around 400,000 new jobs being created per month, in the US, a figure that now appears to be increasing, it is ridiculous to talk about the US being in recession, or that its output is falling. To believe that, you would have to believe that these millions of additional workers are being employed not only to do absolutely nothing, but worse than that, that they were actually reducing the level of output and new value creation!
There was a period when something like that was happening, it was the period of lockdowns, when workers were being forced not to work, but were being paid wages, so as to consume, with those wages being paid by government, and the government borrowing to pay those wages was being financed by central banks printing money tokens to hand out. Indeed, it was that, and the fact that all of these additional bits of worthless paper were being handed out under the pretence that they were actually money, that created the huge levels of inflation that is now being seen across the globe.
The same is true in relation to the Report of the Bank of England. Its comments about a potential recession have been picked up by the media, as part of the ongoing attempts to whip up a moral panic and belief that recession is at hand, which is what the speculators need people to believe to scare workers into not demanding higher wages, to scare consumes from spending money, and to encourage firms not to hire more workers. But, the only reason there will be a recession in Britain is if one is deliberately created, in order to bring about the above conditions, aided and abetted by a continuation of the policies to boycott Russian oil and gas, which has caused energy prices to surge.
Think about it. Interest rates are still near rock bottom. The last time inflation was this high, in Britain, interest rates were at 13%! In reality, UK interest rates are negative by around 9%. Put it another way, if you were thinking of buying a fridge, or a new TV and so on, in a year's time its price will be around 13% higher than in it today, for cars, if they continue as now, that could be 20% higher than it is today. If you were going to spend £10,000 on these different things, they will be £1,300 more expensive a year from now. By contrast, leave the money in the bank, and if you are lucky, it will give you £100 in interest! So, there is every reason at these low interest rates to spend now, and save money on future prices, which means there is a massive incentive for spending as against saving.
On top of that, the Bank of England's projection of a recession depends on workers not getting pay rises, so as to cover rising prices, so that they are forced to cut back spending. But workers are getting pay rises, both because of chronic labour shortages forcing firms to have to pay up to get the required workers, and because workers are joining unions and taking action to demand higher wages, and they will get them. The government as a monopoly employer of labour, and able to use the power of the state, might hold out, but then workers will simply move to other non-government jobs. Outside government, as the latest US jobs numbers show, rising demand for goods and services means that firms have to try to satisfy it, or lose out to their competitors, and in doing so they have to employ more workers, and pay higher wages, which, in turn, leads to more demand for goods and services.
The genie is out of the bottle, and will not be forced back in easily. The only way they can force a recession is by even more extraordinary measures. Using war, and economic sanctions against Russia has backfired on them, because workers are demanding compensation of the rising costs of food and energy, and its likely that they will also have to compensate those on fixed incomes against those rising costs by some form of higher benefits and targeted payments, which will push up government spending further, causing interest rates to rise further still. But, they used the pretext of COVID to unnecessarily lock down the economy for two years, and have kept trying to raise the spectre of COVID ever since, but without success. Even China now looks ludicrous with its zero-COVID policy aimed at closing down its economy.
But, the narrative in relation to Monkey-Pox is being steadily ratcheted up as an alternative to COVID, so we might expect that to be used as the basis of a new moral panic and excuse to break the economy, so as to force down the demand for labour, so as to reduce wages, and demand for capital, and so reduce interest rates, so as to again inflate asset prices. But, the options for the speculators and their political representatives are becoming more desperate by the day.
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