The Economy in Context: September 2019

With the latest job number out from the Bureau of Labor Statistics, we see a job market that is shrinking in key industries (manufacturing and mining), while healthcare hiring increased to support an aging segment of the population, while the largely meaningless official unemployment rate was unchanged.

So let’s start with the important numbers first. The labor force participation rate ticked upward to 63.2%, only 0.3 points above where it was when the current Administration took over. Unfortunately for fans of the White House, a sizable chunk of the employment were in temporary federal jobs for the upcoming 2020 Census.

There were some +130,000 net jobs created during August, however 25,000 were those temporary Census jobs just mentioned, bringing the actual net jobs created to only +105,000. Additionally, June numbers were revised downward from +193,000 to +178,000, and July numbers were revised downward from +164,000 to +159,000.

Under the current White House, the average net jobs created per month is only +191,660, down from an average +223,250 net jobs created per month in 2018 to only +158,250 per month in 2019. The weak August number is also the sixth month in a row where net jobs created were weaker than Obama’s second term averages.

Yet I keep seeing MSM economists saying “this is expected when so few workers are available for hire“, but the labor force participation rate is 4 points below where it was in 2007, before the Great Recession, and has been stuck within a few points of that level since 2014. By definition, there isn’t a shortage of workers.

Meanwhile, let’s not forget that the Federal Reserve lowered the federal funds rate range to 2.00-2.25% when it met in July. This puts the federal funds rate far below the long-term average of 5.00% and well into fiscal stimulus range. This is not, nor has it ever been, remotely a sign of a robust growth economy.

And the Bureau of Economic Analysis revised the 2nd Quarter number GDP growth rate from 2.1% to 2.0%, so, yes, the economy is losing momentum. In the 32 months of the current Administration, the GDP growth rate has yet to be over even a modest 4.0%, peaking at 3.5% twice, well below the 5.5% peak under Obama.

By every objective measure, the economy has been at best mediocre, and, when compared to the performance of the economy since Reagan, this economy has been flaccid, especially in 2019. While the trade war with China certainly hasn’t helped, this is clearly not “the best economy we’ve ever seen in history“.

Liberty is For The Win!

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