Peter Schiff digs into the new jobs numbers and the latest trade deficit report, asking the tough questions the mainstream media avoids. When viewed together, the latest data reveal that the United States’ economy is consumer-based with failing production. Peter believes the uptick in unemployment may be the beginning of a new negative trend.

Audio length: 00:19:56

Highlights from Peter’s podcast:

“Today we got the highly anticipated… monthly non-farm payroll number. The employment situation number. The consensus estimate was for a gain of 230,000 jobs. On Wednesday, we got the ADP report that slightly missed expectations of 220,000. According to ADP, we added 213,000 jobs in January… Most people, myself included, were looking for a weaker jobs number in January, consistent with all of the other macroeconomic data that has been consistently bad throughout the months, including the recent GDP number for the fourth quarter…

“257,000 jobs was the number, better than the 230,000 jobs that had been expected. But I think more significant than that beat, were all of the upward revisions to prior months. Just the last two months alone, November and December, the government increased the number of jobs created by 147,000. In fact, they made upward revisions to almost every month going back to January. So many more jobs, theoretically, were created during the year than was originally reported.

“Also, the average hourly earnings number, [which] is a number Wall Street now pays a lot of attention to, was supposed to jump by 0.3 after fall by 0.2 from the prior month. Instead, it jumped by 0.5, which I think is the largest increase in many, many years. I think that has to do with the large number of states that enacted minimum wage increases that became effective in January, so obviously that’s going to give a one-time bump to average hourly earnings, because unfortunately we have a lot of minimum wage workers now… So that’s not a gain that’s likely to be repeated. I wouldn’t get too excited about that…

“On the surface, the report is much better than estimates. The immediate reaction in the market was swift. You had a big sell-off in foreign currencies. A big rise in the value of the dollar, particularly in the Japanese yen and the euro. You saw a big drop in the price of gold. Gold immediately went down about 20 bucks, it’s now down about $30 an ounce… This stands in sharp contrast to the muted reaction in the currency markets and precious metals markets to yesterday’s horrific trade deficit number…

“The unemployment rate did tick up to 5.7%. It was supposed to remain steady at 5.6. Instead, it notched up. One of the reasons is that the labor force participation rate did move up to 62.9 from 62.7. But 62.7 was the record low, so we barely bounced. And we ended last year with an all-time low for labor force participation. How is it that it was such [worse] year for job creation if so few people participated in the labor force? …

“The fact is if you just look at labor force participation among 60-year-olds, 70-year-olds – it’s rising. Where the labor force participation is plunging is 20-year-olds, 30-year-olds. It’s younger people. It’s completely opposite of what the president’s economic advisor is saying… How are you going to get good economic advice from an advisor who doesn’t even know the facts, if he’s pretending that it’s about the baby boomers are retiring? It’s easy to pretend that, because it makes sense. Yeah, we had a baby boom, they’re getting older. It makes sense that they’d retire. But the reality is that they can’t afford to retire. The truth that they don’t want to admit is that it is the young people…

“Here’s one interesting anomaly when I’m looking at these jobs numbers. There’s two things going on. All the other data points to a weakening economy. Now you have this one data set – jobs – that says the economy is stronger. So which is it? I think eventually the numbers are going to have to change to be consistent. Either all the other data is going to have to change to be consistent with the strong jobs numbers, or the jobs numbers are going to weaken to be consistent with all the other data…

“If you look at the number that we got yesterday from Challenger Job-Cut Report – 53,000 announced layoffs in January. That’s the most in any January in 3 years. In fact, that’s the most layoffs announced in January since February, 2013. So it’s an almost 2 year high in announced layoffs. I think that uptick in the unemployment rate could be the beginning of a new trend. It’s the end of the decline, and the beginning of a new increase…

“Here’s an interesting piece of data… According to the non-farm payroll number that we got today, in the energy sector, the oil and gas sector, in January, only 1900 jobs were lost… According to the numbers we got yesterday from Challenger, they reported 21,322 job cuts in the energy sector. So what’s more likely to be the correct number? … Given all the job losses, the government’s number – there’s no way that that’s true… If the government is so far off in the number of people that lost their jobs in the energy sector, maybe they’re also off in the number of people who they think gained jobs in other sectors…

“Let’s talk about yesterday’s trade deficit, which was horrific. This was the trade deficit for December, and also goes into the calculation for fourth quarter GDP. They were assuming that the trade deficit was going to improve in December. It was $39 billion in November. They were looking for a decrease… They were looking for $37.9 billion. Instead, we got $46.6 billion. That’s the highest trade deficit in about 2.5 years. It’s a 17% increase from the prior month…

“In dollar terms, this was the biggest increase in a monthly trade deficit ever. Ever in US history. This is the biggest miss in the history of misses when it comes to the trade deficit. The reaction in the foreign exchange markets? Nothing. Couldn’t care less…

“The media spins this as good news: ‘The stronger US economy, we’re sucking in all these imports. Our economy is so strong, our consumers are out there spend.’ Uh-uh… If our economy was strong, our workers would be producing. We wouldn’t’ need to rely on imports. In fact, we’d be producing so much stuff with our strong economy, we could export more…

“We created all these jobs, yet we’re importing more stuff. That’s because we’re creating consumers and not producers. That is the problem with these jobs. The other thing the media did to spin this as if it’s not that bad, they blamed it on the strong dollar… That’s not it either. There’s something called a J curve, [which] means that the initial effects of strong currency is that your trade deficit goes down, because your imports cost you less… Over the longer term, yes – if we have an overvalued dollar, we’re going to end up with a bigger trade deficit. But in the short run, the dollar going up would bring down the trade deficit… Instead, our trade deficit is ballooning in the short run. That’s not a function of foreign exchange, it’s just a fundamental weakness in the American economy…

“How many times can the dollar rally on the same news? How many times can gold go down on the same news? This has been the story all year. This has been driving the markets – the idea that the Fed is going to raise rates and nobody else is, because the US economy is so strong. Well, I don’t believe the economy is strong…”