The economy: What Ben hath wrought.

All this aggression has certainly been good for the stock markets. Reuters again: “The Dow and S&P 500 advanced to all-time closing highs on Friday, with major indexes jumping 1% after an unexpectedly strong April jobs report eased concerns about an economic slowdown.” If the US economy were a hospital patient, we could say that his status has been upgraded from “critical” to “fair,” but he doesn’t know whether he will ever be discharged and fears that when he is the bill will kill him.

The “strong” jobs report saw the headline unemployment rate fall from 7.6% to 7.5%. Look beyond the headline, however, and the numbers just aren’t very good. Mike Shedlock notes, “Voluntary plus involuntary part-time employment rose by a whopping 441,000 jobs… Full-time employment fell once again, this month by 148,000.”

Furthermore, “The Participation Rate was flat at 63.3%, a low dating back to 1979.” (Comparisons to 1979 are not particularly useful, as they fail to take into account the feminist revolution in the workplace. Female participation in the US labour force rose from just over 50% in 1980 to 60% in 1998. As a result, housewives are now either rather rich or quite poor, and the two-earner household is almost de rigueur, again except for the quite poor and rather rich.)

ZeroHedge notes, “Perhaps the most curious development in the April jobs report is the gender breakdown: of the 293,000 jobs added per the Household Survey, women workers (aged 16 and older) accounted for… 384K? Men—sorry. 90,000 males lost jobs in April.” Why is this significant? Because women earn less than men.

In related news, “Just like in prior months, a key part of the [job] growth was attributable to those aged in the 55-and-over group, which added 79,000 workers, although a surprising change was the massive addition of some 187,000 workers in the lowest paid, 20-24 age group… The prime working demographic, those aged 25-54, saw yet another decline, as 16,000 workers exited the ranks of the employed.”

Hours worked fell, while the average hourly wage hardly budged. “In other words, the US economy added 165,000 jobs, and yet US businesses paid $323.2 million less in total wage compensation.”

There has been an economic recovery in the United States. The problem is that the benefit has gone entirely to the rather rich. From 2009 to 2011, Pew reports, the net worth of the top 7% has risen 28%, while the remaining 93% saw a loss of 4%. This is not an anomaly; this is what John McMurtry has dubbed “cancer-stage capitalism” in action.

Henry Blodget writes, “One of the big problems in the US economy right now is that big corporations are generating record profits not by growing revenues but by cutting costs… As a result, we have reached a point where corporate profit margins are at all-time highs, and corporate wages are at all-time lows as a percent[age] of the economy.”

Blodget points out that “The employees whose collective wages are stagnant or dropping account for most of the spending that drives the economy. So, if employees aren’t getting paid well, and corporations aren’t spending, the economy can’t grow quickly.” When he suggested that perhaps “corporations could be persuaded to just voluntarily pay their employees more,” Gary Shilling called him a “Marxist.”

One wonders whether Shilling has heard of Henry Ford, no Marxist he, who in 1914 doubled his workers’ wages, thereby benefitting them, the Ford Motor Company and the American economy. A century ago, the “economy” was understood as more than a savage and pitiless abstraction.

Today, we spell economy D-o-w. All other considerations are surplus to requirements. Not for long, however, and there will be a terrible price to pay. As Peter Schiff told Maria Bartiromo on CNBC Friday, “We have a completely phony economy that is driven 100% by cheap money. The minute you take it away, the whole thing implodes.” He warned, “The next collapse is in the value of our money: the dollar.” In preference to the dollar, Schiff counselled, “You can own some gold; the central banks can’t print that.”

Ah, but what of April’s crash? Schiff is sanguine: “Have you ever seen a bull market that didn’t have a correction? Why don’t you buy this dip?”

Stock Tips and the Joke of the Week