The Economics Quarterly: February 2019

GDP GROWTH DATA

According to the preliminary (and delayed due to the shutdown) estimate for the fourth quarter of 2018, the economy grew at 2.6% GDP growth rate, which was above the 2.4% forecasted and above the three previous fourth quarters, but less than long-term mean (since 1950).

GDP Growth Rate (1/1/2001-12/31/2018)

United States GDP Growth Rate

INFLATION RATE DATA

The inflation rate rose in the fourth quarter from 2.1% in October to 2.2% in December, but inflation remains below where it was in the third quarter.

Inflation Rate (1/1/2001-12/31/2018)

United States Core Inflation Rate

JOB NUMBER DATA

The third quarter jobs number peaked at 277,000 jobs in October, with 695,000 net jobs being created over the quarter, putting it above the fourth quarter totals in 2013 and 2016, but below the highs of 2014 and 2015.

Job Numbers (1/1/2001-12/31/2018)

United States Non Farm Payrolls

LABOR FORCE PARTICIPATION RATE DATA

The labor force participation rate rose from from 62.9% in October to 63.1% in December, putting it at just 0.2 points above where it was January 2017.

Labor Force Participation Rate (1/1/2001-12/31/2018)

United States Labor Force Participation Rate

FEDERAL FUNDS RATE DATA

The federal funds rate rose from 2.25% in October to 2.5% in December. It is still just half of the long-term average of 5.0% (since 1950).

Federal Funds Rate Rate (1/1/2001-12/31/2018)

United States Fed Funds Rate

GOVERNMENT DEBT DATA

The government debt grew from $21.7 trillion in October to over $21.974 trillion by December. The national debt topped $22 trillion in February and has been growing steadily, slowed only by hitting the legally mandated debt ceilings, which have simply been pushed upward to accommodate new debt.

Federal Debt (1/1/2001-12/31/2018)

United States Government Debt

THE READ

While the economy overall has experienced strengthening growth since 2016’s rather modest performance, there hasn’t been a single quarter above 5%, despite loose fiscal policy with interest rates well below the long-term average. A strong economy with a low interest rates should be pushing 7% to 10% GDP growth rates, but it’s not.

Further, labor force participation is still languishing at Jimmy Carter era levels. When Carter left office in January of 1980, the labor force participation rate was 64%, which is obviously higher than the anemic 63.2% we have today, which is only 0.3 points higher than it was January 2017, when the current administration came into office.

It is obvious something is holding the economy back, but no one is dealing with the underlying problem. Putting Americans back to work is simply a matter of lowering the minimum wage, but that’s not something that anyone in Washington has the political will to get done. With millions of Americans sidelined, demand will remain suppressed.


Liberty is For The Win!

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