That's all the responce?
1. The businesses significantly reduced borrowing and are actually reducing debt - meaning they do not expect it to be profitable to borrow money and add to the supply of capital even at such low rates. But the total bank loans are up.
What's going on?
The businesses do not expect business to be profitable. There is no accumulation of capital and maybe even decululation - businesses not replacing worn-out capital, preferring to reduce their capital and debt. That may be the first time in US history that happens in the election year inspite of monetary pumping by Fed. Could it be that buisiness people learned from the past?
At the same time consumers are borrowing like crazy.
2. According to August figures, the businesses laid off 93,000 people, yet unemployment dropped from 6.2% to 6.1%.
How can this be?
Because of how the Bureau of Labor Statistics defines "unemployment." You might think that unemployment means "not having a job." Actually, the term is officially defined as follows:
Unemployed persons are all persons who had no employment during the reference week, were available for work, except for temporary illness, and had made specific efforts to find employment some time during the 4-week period ending with the reference week.
The estimate for August is that, while 93,000 workers got fired, 566,000 officially unemployed workers stopped looking for work, July/August, thereby removing themselves from the ranks of the officially unemployed.
Thus, the unemployment rate dropped. Whoopie!
3. Businesses are not investing in capital/equipment but the productivity is rising. How could it be raising without inrease in the supply of capital?
Businesses are firing a lot of workers - starting with the least productive. The statistical number of average productivity of the remaining employed workers correspondingly increases.
So, unemployent is growing, business is not expanding, productivity of employed workers is not really growing. Nice recovery.
miko
