The Federal government released economic data for September late last week. So, happy days are here again, right? The US economy is going great guns, yes?
Two words: um, no. As has been the case for the last 7 years, the economy . . . remains in the freaking toilet.
There was one change, though. The US labor participation rate did not remain at 62.6% last month. Rather, it declined further: to 62.4%. Once again, that’s the lowest the US labor participation rate has been since October 1977 – or early in the Carter Administration. It also marks the 18th consecutive month that the labor participation rate has been at Carter-esque sub-63% levels.
This means only 62.4% of the US civilian labor force is actually working or actively looking for work. As noted above, it’s also a 38-year low – which now has been the case for four straight months (July, August, and September’s labor participation rate of 62.6% were all previously tied for the lowest since October 1977).
As noted above, the US labor participation rate has also been at or below 63% for a full two years 18 months now. We never saw that during Carter’s catastrophic economic mismanagement.
And on top of that, job creation was far less than expected. Meanwhile, the US “official unemployment rate” remained at 5.1%.
That last is not good news. The “official unemployment rate” remaining steady at 5.1% is not, as some might claim, in and of itself an indicator of economic progress. By itself, the “official unemployment rate” is absolutely worthless as a measure of the economy’s actual performance; it tells you virtually nothing about the underlying economic reality.
That’s because the “official unemployment rate” – U3 – is calculated using only those who are “actively looking for work” but who are unable to find employment. “Actively looking for work” is defined as looking for work within the last 4 weeks. However, if someone has gotten completely discouraged and has quit even trying to find work, they’re not counted at all for U3 purposes. The labor participation rate, in contrast, accounts for them.
So, when the “official unemployment rate” stays steady at the same time job creation is too weak to keep up with new entrants, that means more people left the workforce than entered. With a growing population, that implies a rather sick economy.
Those who quit looking for work still exist, of course. And at some point in the future, they’ll almost certainly start looking for work again.
U3 is such a p!ss-poor measure of actual economic performance that it’s even possible for the “official” unemployment rate to decline at the same time the economy is actually losing jobs. I’ve provided a short, simplified example showing how this can occur in this past article.
That’s essentially what’s been happening over the past several years. The US labor participation rate has gone down by 3.3% since January 2009. Since there are roughly 251 million individuals in the US civilian labor force today, that means a huge number of Americans who should be out looking for a job have become so discouraged they simply aren’t even bothering to try. However, if and when conditions actually show some real improvement many of them will start looking again – and the unemployment rate will jump. That is when you’ll know a recovery has really started.
One last bit of “good news”: remember those “excellent” job creation numbers for August and September we heard so much about? That were higher than projected? For some reason, they were revised downward last month – substantially. Due to either error or design, the original numbers apparently were not even close to being correct. And it gets even “better”: those revisions now seem to indicate a possible 3-month downward trend in monthly job creation by the economy. If that’s really the case, that’s NOT good news.
Recovery? The correct response to anyone who talks about any “current economic recovery” is exactly the same as it’s been for the past 7 years: “What freaking economic recovery? So far, there hasn’t been an economic recovery.
All we’ve seen is economic stagnation, along with people becoming discouraged to the point of giving up on even looking. And on top of that, wages have been generally declining in real terms the whole time – and in current-dollar terms last month as well, though only slightly.
It’s been almost 6 years and 9 months, Mr. President. Are we ever going to see any real economic progress under your group of feckless fools and clueless tools Administration?
Eh, don’t bother to answer. I think we already know the score.