The latest economic report came out from the Bureau of Economic Analysis on February 26th, and there has been a revision upward of the Q4 2015 number by 0.3 points.
Real gross domestic product increased at an annual rate of 1.0 percent in the fourth quarter of 2015, according to the “second” estimate released by the Bureau of Economic Analysis… negative contributions from exports, nonresidential fixed investment, state and local government spending, and private inventory investment…
Despite an increase in federal spending in Q4 2015, state and local spending was cut back due to budget shortfalls, and a reduction in investments in future inventories kept growth slow. Producers are betting against near term demand so keeping inventories low to avoid depreciation, choosing to stay liquid. As was stated last Economics Speed Round, since federal government spending is simply a reallocation of productive activity already counted elsewhere, nongovernmental GDP growth is still around 0.0% for Q4 2015.
The employment situation was released on February 4th, and the initial payroll number is a strong 242,000, and the unemployment rate remains at 4.9%.
Total nonfarm payroll employment increased by 242,000 in February, and the unemployment rate was unchanged at 4.9 percent… Employment gains occurred in health care and social assistance, retail trade, food services and drinking places, and private educational services. Job losses continued in mining… and the number of unemployed persons, at 7.8 million, was unchanged… December was revised from +262,000 to +271,000, and the change for January was revised from +151,000 to +172,000…
While 242,000 jobs represents strong job growth under normal circumstances, even including the revision of 30,000 additional jobs in December and January (after previous revisions downward for December), this number is still below the 312,500 jobs needed to create full employment by the end of Obama’s last term.
The bulk of the jobs created are in low skill sectors, such as retail (55,000 jobs) and food services (40,000 jobs). Aggregate weekly hours for construction, manufacturing, and information technology workers are all still down (table B-4). The only skilled labor (career field) driving employment remains health care (57,000 jobs), which is being fed by ObamaCare. Further, much of the growth of health care comes from large lay offs that occurred in and after 2013’s implementation of Obama’s signature legislation.
The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 2.2 million in February and has shown little movement since June… number of persons employed part time for economic reasons (also referred to as involuntary part-time workers) was unchanged in February at 6.0 million and has shown little movement since November…
While younger workers are finding employment in low skill jobs, many long-term unemployed are still unable to find work. Millions of part time workers are unable to find full time work, despite needing or wanting more work.
…employment-population ratio edged up to 59.8 percent over the month, and the labor force participation rate edged up to 62.9 percent. Both measures have increased by 0.5 percentage point since September…
Increases in EPR and LFPR are a welcome change, these numbers are still at historic thirty to forty year lows. With many signs pointing toward a recession in the near future (predicted by Q3 of 2016) as the Federal Reserve continues its Quantitative Easing policy, and its core interest rate remains below 0.5%, with another recession looming.
That’s the Economics Speed Round for March. Catch everyone next month.
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