. . . one short-term, and one long.
The short-term “good news”: the US labor participation rate for April was 62.8%. That was indeed a slight increase from the previous month – and was slightly less than it was this month 37 years ago during the middle of the Administration headed by that “truly wonderful” POTUS, Jimmah the Clueless Jimmy Carter.
Of course, longtime TAH readers know that is NOT exactly good news. Due to normal population growth, that also means we now have a record number of Americans eligible for the civilian labor force who aren’t even trying to work. The estimated number not working today who could be is 93,140,000.
The labor participation rate for US women is also at a 27 year low. Due to population growth during the last 27 years, that in turn means the number of American women not working is also at an all-time high – approximately 56,167,000.
The US labor participation rate is probably the best single common measure of the overall performance of the US economy (and even it is not complete). It’s been stagnant – mired at Carter-stagflation levels – staying at or below 63% for the past 18 months.
Yeah, the “official” unemployment rate (U3) did go down a bit too. But the “official” unemployment rate is effectively worthless as a measure of actual economic conditions. Follow it if it makes you feel better, but it won’t tell you much.
As far as I’m concerned, I’ll get excited about the economy when the labor participation rate begins to show steady improvement over time. So far, it hasn’t. It’s been caught in Carter-doldrums territory, drifting aimlessly and without direction, for the past 18 months.
But at least it’s stopped its free-fall. That only took this clown krewe Administration close to 5 years. Even Carter’s ship of fools Administration did better than that.
Second, the long-term “good news”. Remember all those predictions that Social Security was going broke, and would have to cut benefits starting in less than 20 years? (When Social Security’s so-called “trust fund” is exhausted it becomes fully PAYGO, with outlays limited to income – which is predicted to be about 3/4 of what’s needed. When that happens, benefits in turn will be cut – or other funding will have to be found, through either more borrowing or even higher taxes.)
Well, it seems as if some Ivy League researchers – at Harvard and Dartmouth – took a look at Social Security’s future projections. Their conclusion?
Social Security’s own projections concerning it’s so-called “trust fund” appear to be biased and overly optimistic – and have been for well over a decade. The truth of the situation appears to be worse.
Specifically, the researchers found that Social Security’s estimates of their trust funds’ financial health have been overoptimistic since around 2000. (emphasis added)
“After 2000, forecast errors became increasingly biased, and in the same direction. Trustees Reports after 2000 all overestimated the assets in the program and overestimated solvency of the Trust Funds,” wrote the researchers, who include Dartmouth professor Samir Soneji and Harvard doctoral candidate Konstantin Kashin.
The “so what”? The Social Security “trust fund” is what will temporarily make up the difference between Social Security’s tax income and benefits paid when Social Security’s tax income falls below outlays (and yes, Social Security is funded by current taxes – they’re called “FICA taxes”, and are assessed on the first $119,000 of wages earned). That will happen in a few years (2019 is the current projection), which means the fund will start being tapped in then. And Social Security itself projects that “trust fund” will be depleted by 2033.
But if the “trust fund” isn’t in as good a shape as we’ve been told . . . it will likely be depleted earlier. How much earlier? Unknown.
Bottom line: Social Security’s “trust fund exhausted” point might well be considerably closer than the the Social Security Administration’s own projected date of 2033. Joy, joy.
Sorry for the “bummer” article today, but it’s better to be told the truth up-front than to get blindsided by reality.