The Economy in Context: June 2019

Last Friday, the latest job numbers came out from the Bureau of Labor Statistics, and there’s not a lot of good news for the economy here. The labor force participation rate remains stuck at 62.8%, about where it’s been stuck since 2014. That’s now five years without any lasting significant improvement in the labor force numbers.

Meanwhile, the unemployment rate remained at 3.6% for the month of May, but the official number doesn’t take into consideration anyone not currently in the labor force. The unemployment rate being at 50 year lows doesn’t mean much when fewer people are in the labor force (as a share of population) than there were 40 years ago.

There were only 75,000 net jobs created in May 2019, which, in a country of over 300 million Americans, is clearly not good. Further, the net jobs created for both March and April were revised downward, from 189,000 jobs to 153,000 jobs for March, and from 263,000 jobs to 224,000 jobs for April, for 75,000 fewer jobs created.

Meanwhile, the federal funds rate remains at 2.5%, where it’s been since late last year. Keep in mind that the federal funds rate has been below 4% since the beginning of 2008, smack in the middle of the last recession. The fact is that a federal funds rate of 2.5% has never been and never will be indicative of a robust growth economy.

Unfortunately, there are a lot of people that remain stuck on the 3.6% unemployment number, but it’s really the least important figure in the entire jobs report. Bragging about a 3.6% unemployment rate with 62.8% labor force participation is like bragging about how well a cupcake fits in a ring box. No one wants that cupcake or the ring box.

The government, the media, and the public are all focusing on the wrong things, but if they focused on the right things, they’d be a lot more worried. They should be a lot more worried.

Liberty is For The Win!

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