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I have been so busy at Law School that I haven’t had an economic post in quite some time. With this being jobs Friday on Wall St, now seemed as good a time as any.

Employment numbers are picking up. But really, so what. The type of job that is being created and the wages that it pays are the important factors when looking at job creation.

Manufacturing jobs, high wage jobs, are disappearing and staying low. While fast food service etc are being created. The pay is however minimum wage. As this transition takes place, average earnings and consumption falls.

This has in no small measure contributed to the muted economic recovery. If you lost a higher paying job which could only be replaced with a lower paying job your consumption habits must change.

We had earnings finish up this week and they were not great. In fact the bar has been lowered to such an extent that earnings do not actually provide anything much of importance. Add to that the accounting manipulations that will be occurring and they are almost worthless. A significant reason is the falling aggregate power of consumption.

Which is why the Federal Reserve will continue to inflate. Until of course that the inflation forces it to stop, which while it may take a while longer, will eventually happen. At that point stocks will be sold. Until then, the market remains an uneasy buy.

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