Economics Speed Round: November 2016

The election is over with a surprise ending that many people, including myself, missed. All of the data, both positive view of the president and positive economic data seemed to give momentum to the Democratic candidate. Given the intensity of the election, this article has been delayed, but, even given the age of the data, it’s important to look back at it.

Highlights from the September Jobs Report

  • Net nonfarm payroll rose by 161,000.
  • the U-3 unemployment was little changed at 4.9 percent, a 0.1 point improvement.
  • the U-6 unemployment dropped 0.1 point in October to 9.2 percent, but there was little change of the seasonally adjusted U-6 of 9.5 percent.
  • labor force participation rate, at 62.8 percent, changed little.
  • employment-population ratio, at 59.7 percent, changed little.

Job numbers for August were revised upward to 176,000, and job numbers from September were revised upward to 191,000 net jobs created, even after several downward revisions. Compared to the 2013-2015 average for October, the current number is 60,000 fewer than the 228,000 average of the previous three years, indicating a continuing long term softening in the employment market. Other indicators are changing negligibly.

Highlights from the 2nd Quarter Economic Report

  • 3rd Quarter GDP grew at an annual rate of 2.9 percent, in its initial estimate.
  • 2nd Quarter GDP grew at an annual rate of 1.4 percent.

The 3rd Quarter GDP number is +1.5 points higher than the 2nd Quarter GDP number, and a full +2.1 points higher than the 1st Quarter GDP number. While the GDP number is obviously relatively robust (compared to the average for the Obama Administration) in this initial estimate, it is largely based on increases in consumer spending, exports, and federal spending, per the report. In the background are the continued Quantitative Easing monetary policy and a low federal funds rate. Inflation has been increasing (to 1.5% in October from 1.1% in September), but remains very low overall, and is currently projected to be lower in November, which indicates a very low likelihood of any change in Federal Reserve policy.

As we look toward the end of the year and the 4th Quarter, the change in political leadership could change the economic landscape, depending on how quickly the Congress and White House can enact whatever policy they plan on pushing forward. There are significant questions as to the exact policy directions that the incoming leadership will be taking the country, as many of his campaign policies have already been brought into doubt in the days after the election. Time will tell.

Liberty is For The Win!


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