The Economy in Context: August 2019

Last week, the Bureau of Labor Statistics released the Jobs Report for July, and there is a lot to be concerned about going forward. Let’s start with the labor force participation rate, which crept up to 63.0%, all of 0.1 percentage points above where it was the day the previous “bad economy” administration left office and the current “good economy” administration took office, and about where it’s been since 2014.

The official unemployment rate remained unchanged at 3.7% from the previous month, which is actually not a terrible indicator, because some portion of the workers reentering the labor force are apparently finding work, but the unemployment rate is notoriously misleading, because the data sets it’s based on are, by definition, very preliminary and prone to change significantly for months to come.

And speaking of preliminary, the preliminary estimate of net jobs created was only 164,000 jobs, which puts it as the lowest net jobs created under the current Administration for the month of July. There were 190,000 jobs created in July 2017, and 178,000 jobs were created in July 2018. This is the third month in a row where net jobs created for the month was lower then the prior two years.

Meanwhile, the federal funds rate was reduced to 2.25% in July, which is a giant red flag regarding the health of the economy. Let’s not forget that the last time the federal funds rate was lowered to 2.25% was in March 2008, when both the US Financial Crisis and the Great Recession were in full swing. This isn’t a sign of a booming economy. It’s a sign of an economy that’s ready to come apart at the seams.

Additionally, the Bureau of Economic Analysis released a preliminary estimate of the second quarter GDP growth rate of only 2.1%. That’s the second lowest it’s been since the fourth quarter of 2016, which was 2.0%, with the lowest under the current administration being fourth quarter 2018, which was 1.1%. The highest the GDP growth rate has been under this administration is 3.5%, which not “booming“.

The current administration is desperate to have American voters believe their blatant mediocrity is somehow better than the blatant mediocrity of the prior administration, even though average net jobs created per month has only been 165,140 jobs in 2019, compared to the average of 215,880 of the previous administration’s “weak” second term or even the average of 195,330 in 2016. Don’t be fooled.

Liberty is For The Win!

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