The Economy in Context: May 2019

When Jimmy Carter left office in January 1980, the labor force participation rate had topped out at a meager 64.0%. When Barack Obama left office in January of 2017, labor force participation was at a wretched 62.9%. Now it’s at 62.8%. Can an economy with worse labor force participation than either Carter or Obama be “great”?

The unemployment rate fell to 3.6%, but since LFPR dropped by 0.2 points from the previous month, but what does it actually matter, if much of the improvement in unemployment rate can be chalked up to the government simply not counting tens of thousands of people who were in the labor force a few weeks ago, but not now.

According to preliminary estimates, an estimated 236,000 net jobs were created in April, but that number is undercut by the fact that the average of the last six months of jobs data is 202.67k net jobs created per month, much less than the 215.73k net jobs created per month of Obama’s second term, which Trump repeatedly characterized as “weak“.

The federal funds rate remains at emergency stimulus rates of 2.5%, only 0.25 points above the Federal Reserve Board’s initial failed attempt to cut off the financial crisis in 2008. Every other economic indicator, whether good, bad, or somewhere in the middle is colored by this fact: The federal funds rate is still at crisis levels. Full stop.

So let’s walk through the basic facts. Labor force participation is at nearly 50 year lows. Net jobs created are averaging below Obama’s second term of “jobless recovery” and certainly aren’t anywhere near the numbers the current administration had promised. The federal funds rate remains at financial crisis levels. Is this a healthy economy?

Who do you believe?


Liberty is For The Win!

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