- John Williams: How to Survive the Illusion of Recovery!
Source: JT Long of The Gold Report
There is no economic recovery, and there are no signs that a recovery is coming, says Shadowstats.com author John Williams. In this Gold Report interview, he blames mal-adjusted inflation statistics for creating an alternate reality that overestimates economic activity in a way that is unsustainable. Williams warns that eventually the painful truth will be so difficult that even government manipulation won’t be able to deny it and that is when hyperinflation will take its toll on those who have not taken his advice for preserving purchasing power and securing wealth.
The Gold Report: The last few years have been very volatile for investors, particularly resource equity investors. The mainstream media, citing government statistics of improved employment rates and housing starts, called an end to the recession and is forecasting a slow recovery in 2013. You are looking at the same indicators, but coming up with different numbers. Let’s start with the unemployment rate. What are you seeing and why is it different than what we are hearing everywhere else?
John Williams: I contend that the economy effectively hit bottom in June 2009, followed by a period of somewhat volatile stagnation, and it is beginning to turn down anew. There never was a recovery and no economic data shows the type of recovery that the official gross domestic product (GDP) report is showing. The GDP shows levels of activity now that are above where the economy was before the recession. It’s been above that level now for more than a year. No other major economic series has shown a full recovery, shy of perhaps inflation-adjusted retail sales, which is due to a problem with the inflation rate used to adjust the series. Generally, the illusion of recovery has resulted from the government’s use of understated inflation.
TGR: Are you predicting a double-dip recession?
JW: It’s more like the pattern a fellow would take going off a ski jump. A plunge and then moving forward, maybe up a little bit and then plunging anew. The economy officially will be recognized as a double-dip recession at some point, but in reality it’s all part of the ongoing economic crisis that we’ve seen for the last five or six years.
TGR: One of the indicators people look at to determine the existence of a recession is the unemployment rate. Why you are seeing a different number for that than some of the officially announced numbers?
JW: Unemployment is a matter of how you define it. The government has six measures of unemployment. The headline number is the third level of unemployment (U3). That measures people actively seeking work in the last four weeks. That doesn’t mean just reading newspaper want ads; it is people mailing resumes and doing interviews. That number was reported at 7.9% for January, but that’s not the common experience. The broadest measure that the government has is U6. That includes the people defined as unemployed in U3 plus what they call “discouraged workers” and those who are working part-time for economic reasons, people who are underemployed. U6 was at 14.4% in January.