The Economy in Context: October 2018

The Bureau of Labor Statistics released the latest jobs report on Friday, and the numbers show a mixed bag. Net jobs created was positive, but much lower than anticipated. The government is blaming the low number on hurricane Florence that hit North Carolina as a category 1 hurricane. While being a fairly weak hurricane, five people lost their lives to the storm, and much of the region is still recovering from the flooding.

The labor force participation rate remained at 62.7%, 0.2 points below where it was when the current administration took office in 2017 and has only been above that point three months of the last twenty-one months. It is simply a fact that the economy under the current administration is not creating enough jobs for more people, at least as a ratio of the working population. Can the economy be said to be “great” when four out of every ten working age adults are excluded from the economy (and, no, it isn’t because Baby Boomers)?

United States Labor Force Participation Rate

Coupled with poor labor force participation is the rather tepid preliminary jobs numbers for September. According to the initial report, only 134,000 net jobs were created last month, marking yet another month where the number of jobs created was below the second-term average net job creation under Obama of 209,250 net jobs created in September. The current administration’s economy has only outperformed the average performance of the previous administration (post recession) eight months out of the last twenty-one months, or roughly one-third of the time.

United States Non Farm Payrolls

And let’s not forget, the federal funds rate is still at between 2.00% and 2.25%, which is still stimulative monetary banking levels, yet employment still has not taken off. The gross partisanship that has taken over both the media and the political rhetoric in Washington ensures almost no one talks about this. The Republicans can’t talk about it, because it undermines their “making America great again” propaganda, and the Democrats can’t talk about it, because they’d have to admit how flaccid Obama’s economy really was.

At 62.7% labor force participation, the United States economy is where it was in January 1978, right in the middle of the stagflation economy of president Jimmy Carter. There is no universe in which any economic indicator being on par with Carter’s economy is a good sign. Unfortunately, neither of the two major political parties is interested in changing the dynamic in Washington, and nothing is going to change until that dynamic does change.

 


Liberty is For The Win!

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