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The Recovery, Unemployment, and Earnings Are All Based on Fraud and Accounting Gimmicks

For six years, we’ve been told that the US economy is in recovery.

 

This is a totally bogus narrative that was dreamt up by the Central Planners running the Fed. Remember the “green shoots” craze of 2009. It was BS. The US economy is a disaster and has been since 2009.

 

The bean counters in Washington fabricate a load of nonsense to “prove” otherwise, but telling someone who is 5’6” tall that they are actually 6” tall doesn’t change their height.

 

Similarly, telling Americans experiencing a REAL unemployment rate of 10+% and an underemployment rate in the high teens that the economy is “recovering” doesn’t change their real-world experience.

 

As far as real economic growth goes, if you want a clear picture, you need to look at nominal GDP growth. The reason for this is that because the Fed greatly understates inflation, the official GDP numbers are horribly inaccurate.

 

By using nominal GDP measures, you remove the Feds’ phony deflator metric and the other accounting gimmicks created by the bean counters to overstate growth. With that in mind, consider the year over year change in nominal GDP that has occurred.

 

 

 

Historically, the level of economic growth post 2010 has been associated with recessions. Small wonder that this “recovery” actually feels like an economy that is not growing: when you take out the accounting gimmicks, GDP is flat lining.

 

Speaking of accounting gimmicks consider the massive divergence between corporate revenue growth and EPS growth (hat tip Lance Roberts). You cannot fake revenues: they represent real growth. EPS on the other hand, can be massaged a million different ways.

 

 

Notice that the un-massaged growth post-2009 is just 30%. The massaged “growth” is 250%. Bear in mind, executive stock options are linked to EPS… so guess who got rich in the process.

 

Again, this whole economic “recovery” and stock market boom is based on accounting gimmicks and outright fraud. It’s a giant house of cards that is primed to come crashing down… just as it did in 2000, 2007… and will today.

 

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Best Regards

 

Graham Summers

 

Phoenix Capital Research