How’s the job hunt going?

“No catches yet, but I haven’t given up.”

What about that interview with the environmental consulting firm in Colorado?

“You mean the eco toxicology job? I didn’t get it, but it was probably for the best anyway. The 10 bucks an hour would have been nice, but counting microorganisms all day long gets pretty tedious. Believe me, I have done that before.”

Ten dollars an hour? Doesn’t sound like it paid that great anyway.

“Yeah, and do you know what the interviewer told me after I called back to see if I got the job? She said that 90 people applied for the position, including three people with Ph.D.’s. Usually just 10 or 11 university undergrads apply each summer.”

Wow! Ph.D.’s taking $10-per-hour jobs? Things must be getting tough.

“You’re not kidding. You should have seen all the homeless people in Denver. What shocked me the most is how many looked like regular guys, not the doped-up alcoholics that usually stand on the corners.”

Real Economy

Yes, the real economy is shriveling up, just as investors, politicians and media commentators think they see a recovery—the oft-quoted “green shoots.”

Green shoot number one: Stocks are up 35 percent since the March 9 bottom. The stock market supposedly predicts the economy, the argument goes, therefore recovery is on the way.

Some people will believe just about anything. If the stock market was so smart, why did the Dow Jones soar to 14,000—an all-time high—less than a year before the big investment houses began to fail and the economy fell off a cliff? The stock market isn’t any smarter than the average soothsayer or Wall Street gardener.

Green shoot number two: House construction starts were up 3.6 percent in June. It is good that a few more people may be employed, but another 582,000 houses, built to take advantage of government subsidies, are the last thing America needs. There are already a near record number of homes for sale in the country. For underwater homeowners, additional supply just pushes prices lower. Lower house prices are not good for the banks either.

Green shoot number three: Auto sales are up. In June, vehicle sales rose to an annual rate of 9.8 million, up from 9 million in February. But the improvement isn’t all it is cracked up to be. Prior to the recession, consumers purchased almost 17 million cars per year. So, many factories continue to operate under capacity. Consumers in general are cutting back on consumption, as reflected in higher personal savings rates. Some new cars will be bought to replace existing fleets, but just replacing old vehicles will not power growth. Additionally, most vehicles today are purchased on credit. Adding more debt to an economy that crashed because of too much debt doesn’t promote long-term economic health.

And the biggest green shoot of them all: record profits by Goldman Sachs, JP Morgan Chase, and a return to profitability for Citigroup and Bank of America. Surely this is a sign that the economy is turning?

No, hopeful citizen, the banks are not good economic predictors either. If they were, they wouldn’t have gotten themselves into such a mess in the first place. And besides, it is pretty easy to turn a profit these days if you are a big bank. All you have to do is take billions of dollars from taxpayers, stash the money at the Fed, and collect the interest. To top it off, now that the government has relaxed the accounting rules to help Wall Street appear solvent, it isn’t quite so hard to cook the books either. Voilà, outstanding profits appear.

Back in the real economy, things aren’t so green.

Federal Reserve Chairman Ben Bernanke claims America will emerge from recession by the end of this year, though job losses will continue for some time after that.

But is a recovery really a recovery if there are no jobs?

Furthermore, 540,000 Americans are expected to exhaust their unemployment benefits by the end of September, and another 1.5 million by the end of the year, according to an analysis by the National Employment Law Project. For these folks, the recession is just beginning.

Sound bites about the end of the recession make for good headlines, but real economic health is not in the near future. And politicians seem to be doing their best to ensure that.

For example, the new minimum wage laws that went into effect this month are like spraying a garden with herbicide to make sure there are no green shoots. Peter Schiff explains: “Low-skilled workers must compete for employers’ dollars with both skilled workers and capital. For example, if a skilled worker can do a job for $14 per hour that two unskilled workers can do for $6.50 per hour each, then it makes economic sense for the employer to go with the unskilled labor. Increase the minimum wage to $7.25 per hour and the unskilled workers are priced out of their jobs.”

Higher wages must be a result of increased productivity or higher worker demand. Arbitrarily mandating that employers pay higher wages means that small businesses have to either raise prices or cut employees. And since America is in a recession, passing on higher prices is not an option for most. Job losses will result.

And contrary to what most economists say, unemployment is not always a lagging indicator. In past shallow recessions, the economy often stabilized and began growing prior to improvements in unemployment. But due to the severity of the current downturn, the contraction in bank lending, and the depth of job losses, unemployment may actually be a leading indicator. If consumers can’t borrow money to repay debts, that means debt service payments must come out of their income. This reduces total consumer spending and thus forces businesses to further downsize to maintain viability. Additionally, there is a strong correlation between job losses and home foreclosures. Increased foreclosures mean banks will continue to be pressured, and thus credit to consumers will continue to be constricted. Two thirds of America’s economy is reliant on consumer spending. Rapidly growing unemployment levels in this case have the potential to derail economic recovery.

Other government-sponsored Agent Orange includes both the carbon cap-and-trade proposal and the socialized health-care plan—either of which could easily defoliate the economy.

Today’s green shoots are just desert mirages. They may give temporary hope, but they also don’t materialize into anything real.