Only a Deep Recession will Affect Jobs Growth
As Wall Street and the Federal Reserve continue to wring their collective hands over the future of a shaky economy, any joy that came from Fed Chair Powell’s Feb. 1 press conference evaporated when the latest jobs report was released on Feb. 6. Analysts had predicted an increase of 185,000 new jobs, but the actual number came in at a red-hot 517,000.
The Fed started raising the federal funds rate in September 2022 with the purpose of affecting interest-rate sensitive sectors of the economy like housing, autos and credit cards. The expectation was that as rates rose, demand would ease, and inflation would begin to decline. To some extent, this approach has been effective, but as Powell pointed out several times in his most recent presser, the Fed’s attempt to tame inflation will not be successful until the tight labor market begins to ease.
Yet, despite a number of indicators pointing to declining economic activity, including the December producer price index (PPI) and the ISM Manufacturing index, the unemployment rate has actually declined as job openings continue to rise. The Fed puts a great deal of emphasis on the jobs report, and Powell has repeatedly said there must be a meaningful increase in unemployment before a pause in interest rate hikes can be considered.
So, what gives? With manufacturing declining and housing softening considerably, the Fed, and many economists, are struggling to understand why the job market is growing, but in reality, the answer is pretty simple.
Economic Stresses from Illegal Immigration
According to Breitbart, 5.5 million illegal aliens have entered the country since Joe Biden became president. That’s a 1.6% increase in the total population of the United States in just two years. This distortion places an unnatural burden on every facet of our economic infrastructure, including food, housing, goods and services.
Worse, these aliens are flush with cash from federal and state governments through a variety of programs designed to integrate them into population centers more quickly. “Qualified” aliens include people with green cards, refugees, asylum seekers, Cubans, Haitians, abused people and survivors of trafficking. “Non-qualified” aliens include everyone else who crosses the border illegally.
Benefits for qualified and non-qualified aliens are robust, and include supplemental nutrition, free public education, free health care, access to soup kitchens, crisis counseling, mental health, child protective services, subsidized school lunches and a variety of other programs that vary by state. In all, it’s estimated that each illegal immigrant costs the taxpayer $9,232 annually. The government has distributed an additional $20 billion in benefits to illegal aliens that arrived since Biden took office, and that’s on top of the $160 billion spent every year to support the existing alien population.
Growing Hostilities with China
Over time, it is becoming increasingly clear that China duped the U.S. into believing its core political philosophy was changing, and they were moving toward a more open society with capitalist underpinnings. However, as their military might grew, while trade with the U.S. simultaneously expanded, they have increasingly returned to their hegemonistic roots in actions taken against Taiwan and neighbors in the South China sea. In short, China has become a threat to global stability, and U.S. based multi-national corporations have taken notice.
As the American public becomes more aware of our dependance on China for rare earth minerals, electronics, pharmaceuticals and other critical components, we’ve witnessed a growing chorus of politicians calling for companies to expand their manufacturing presence in the U.S. As a result, reshoring accounted for around 350,000 jobs returning to the U.S. At present, as global tensions with China escalate, there is no reason to assume that trend won’t continue.
The Core Problem with Inflation and the Labor Market
Remember, all of those 5.5 million aliens arriving under Biden are consumers. They are competing for food, shelter, health care and countless other goods and services. A basic law of supply and demand dictates that when demand rises, prices go up, and employers must expand their workforce. When combined with the effect of corporations moving out of China and reshoring in the U.S., we’re facing a situation where the demand for more workers will continue unabated, especially when a massive number of working-age people are permanently leaving the workforce because the government incentivizes them to do so.
Who Benefits from This Scenario?
It’s clear that neither the majority of Republicans or Democrats want to address the border crisis for different reasons. RINO Republicans are business friendly, and big business needs an ever-increasing pool of consumers to generate the earning beats Wall Street likes so much. Even better, the hordes of illegal aliens, who will do the same work as Americans for less, puts downward pressure on wages, which is reflected in the numbers. While inflation continues to push 6.5%, wage growth sits at 5.28% and is increasingly losing ground to inflation.
On the other hand, Democrats love to create new dependents, so they envision picking up another 5.5 million reliable voters while preaching their faux sanctimonious rhetoric.
Finally, only Xi-Jinping knows what course China will follow in the coming years. Many military analysts believe China intends to invade Taiwan by 2027. The perception of China as a serious adversary will continue to drive jobs away from the communist enclave and back into the U.S.
It’s all kind of disgusting, but that’s the way it is. The next time you see some pundit scratching his head and trying to figure out why the jobs report keeps beating the street number, and the Fed raises the federal funds rate yet again, you’ll know the answer.