The Economy in Context: December 2019

Most people have this urge to cling to news as though it exists in a vacuum, without any consideration for context or history. This tendency is a dangerous one, especially when it’s economic data that’s in the news. Remember Donald Trump correctly characterized Barack Obama‘s economy as “weak” and “bad“, but how does his economy measure up?

Let’s start with labor force participation rate, which remained steady at 63.2%, up only 0.3 points from where it was the day Trump took office but 3.2 points below its last pre-recession 2006 peak of 66.4%. For historical context, the labor force participation rate was only 64.0% on January 20th, 1980, when Jimmy Carter left office.

The number of net jobs created in September was revised upward to +193,000, the second strongest September of the last 5 years. The number of net jobs created in October were also revised upward to +156,000, the second weakest October of the last 5 years. The preliminary number of net jobs created in November was +266,000.

The federal funds rate currently sits at 1.75%, well below the pre-recession rate of 5.25%, and the federal funds rate has dropped 0.75 points from the 2.5% rate where it started at the beginning of this year. Additionally, the Federal Reserve is still expanding its balance sheets in order to pump capital into the economy (aka: Quantitative Easing).

All in all, 2019 is shaping up to be a weak year for jobs, currently sitting at an average of only +179,000 net jobs created per month, which puts it below every year going all the way back to 2011, which had an average of +172,920 net jobs created per month, and 2019 will be the weakest year for job creation of the Trump presidency.

And yet no one is reporting this.


Liberty is For The Win!

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