Our unemployment rate edged up in May to 8.2 percent, from April’s 8.1 percent. And we only added 69,000 new jobs in May, which was a surprise to the mainstream media (and this country’s economists who supply projections to the news media). Why should our economists be surprised that we only added 69,000 jobs to the economy in May? It has been reported that many economists were expecting around 150,000 new jobs to be created.
Our economy would be in a depression if it were not being propped up by trillion dollar federal deficits. But, our news media does not mention this. What would our unemployment rate be if we were not spending $1.3 trillion this fiscal year in deficit spending?
Our federal government is spending about (2012) $3.8 trillion per year, but only receiving about $2.5 trillion in tax revenues. Therefore we are spending $1.3 trillion (3.8 – 2.5 = 1.3) more than we are collecting. If we kept taxes the same, and balanced our budget, we would have to reduce our federal government expenditures by about a third (34 %).
If we applied our spending cuts “across the board” to all areas of federal spending, the economic impact would be tremendous. We would have to fire a third of all federal employees, discharge a third of all military personnel, reduce Social Security payments by a third, stop a third of military purchases from contractors, reduce Medicare payments by a third to doctors and hospitals, etc. You get the picture. There would have to be huge cutbacks. And because of the “multiplier effect,” the cutbacks would be felt throughout our economy.
The economic impact would be devastating. The unemployment rate would soar. Our present 8.2 percent unemployment rate would look good, compared to what would happen.
Our economy is not going to really recover until we bring our factories back from China and other low wage countries. Although federal deficit spending is presently masking the deplorable condition of our economy, we cannot continue to have trillion dollar annual deficits indefinitely.