The Economy in Context: March 2020

The latest jobs report from the Bureau of Labor Statistics has some interesting numbers, but it seems that Americans have a selective memory problem. While the job numbers indicate a fairly normal uptick in jobs created, other key numbers remain weak, and the COVID-19 pandemic threat to international markets continues to grow.

Let’s start with the labor force participation rate. At 63.4%, it’s still only half a percentage point above where it was at the beginning of 2017 and remains nowhere near where it was prior to the recession of 2008, when it was above 66%. As labor force participation is a key indicator of the economic health of the national labor market, the fact it remains so weak this long remains a red flag.

Meanwhile, the preliminary net jobs created for February was +273,000, a number that is, for the moment, moderately strong (over +250,000), but the number, as it is, remains relatively unremarkable when compared to prior February numbers, because past Februaries have featured large upticks in hiring as well, however we’ll have to see if these numbers hold up after revisions.

The net jobs created numbers for December and January were both revised upward, after massive revisions of the job numbers going back decades. It’s very hard to judge how these revisions shape up against a moving target, though it does seem rather unusual that an additional +85,000 net jobs somehow turned up in the paperwork over the last couple months.

The Federal Funds Rate was reduced to 1.25% during an emergency meeting in response to the COVID-19 pandemic emergency. This sort of move is not typically indicative of a sound growth economy, and it’s increasingly clear that the pandemic will have wide spread economic fallout, but it remains to be seen how badly supply chains and international trade will be impacted.

Finally, government debt to GDP has increased to its highest level ever at 106.9%. Given the current uncertainty, vis-a-vis recessionary pressure in the coming months, it is extremely doubtful that the debt situation is going to do anything but get much worse, which, of course, will put additional stress on international financial markets to reevaluate their US Dollar positions.


Liberty is For The Win!

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