Well, the economic news for August is now out.\u00a0 Short version:\u00a0 the economy is still in the freaking toilet.<\/p>\n
For the third consecutive month, the US labor participation rate remained at 62.6<\/a><\/em>%.\u00a0 That means only 62.6% (the actual number, to 6 figures, calculates to 62.5518%) of the US civilian labor force is actually working or actively looking for work.<\/p>\n This is a 38-year low \u2013 for the third straight month.\u00a0 Prior to the last 3 months, the last time the US labor participation rate was this low or lower was October 1977<\/em>.\u00a0 Then, it was 62.4%.<\/p>\n Yes, that does indeed read October 1977 – as in \u201cduring the worst of the Carter years\u201d.<\/p>\n It\u2019s true that the \u201cofficial unemployment rate\u201d fell slightly last month, from 5.2% to 5.1%.\u00a0 But that measure is absolutely worthless, because it tells you nothing about the underlying economic reality.\u00a0 Here\u2019s why.<\/p>\n U3 \u2013 the \u201cofficial unemployment rate\u201d \u2013 is calculated using only those who are \u201cactively looking for work\u201d but who are unable to find work.\u00a0 \u201cActively looking for work\u201d is defined as looking for work within the last 4 weeks<\/a><\/em>.\u00a0 However, if someone has gotten completely discouraged and is no longer even looking for work, they\u2019re not counted.\u00a0 But they still exist.\u00a0 And at some point in the future, they\u2019ll be looking for work again.<\/p>\n U3 is such a p!ss-poor measure that it\u2019s even possible for this to cause the \u201cofficial\u201d unemployment rate to drop while you\u2019re losing jobs overall.\u00a0 I\u2019ve provided a short example at the end to show how this can occur.<\/p>\n That appears to be precisely what\u2019s been going on for the past several years.\u00a0 The US labor participation rate has gone down by 3.1% since January 2009.\u00a0 That means a huge number of Americans simply aren\u2019t even bothering to look for work that should be looking.\u00a0 If the labor participation rate were the same today as it was in January 2009, an additional 7.78 million Americans would be in the labor force.<\/p>\n Today\u2019s US civilian labor force totals over 251 million.\u00a0 Just for \u201cfun\u201d, let\u2019s calculate what the \u201cofficial\u201d unemployment rate would be today if we had January 2009\u2019s labor participation rate.<\/p>\n In January 2009, the US labor participation rate was 65.7%.\u00a0 If that were the case today, the US civilian labor force would be approximately 164,970,000. (Since the US labor participation rate today is only 62.6%, the civilian labor force today is only about 157,065,000.)<\/p>\n However, today only about 149,055,000 Americans have jobs.\u00a0 That means if we had a labor participation rate equal to that of January 2009, we\u2019d have about 15,915,000 unemployed people who were actively looking for work today.<\/p>\n Doing the math gives an unemployment rate of 9.64+% if we had the January 2009 labor participation rate of 65.7%. Since \u201cofficial\u201d unemployment in January 2009 was 7.8%, we\u2019d need at least 4.5 million more jobs than exist today to get back to January 2009 economic conditions \u2013 and nearly 8 million more to achieve a 5.1% unemployment rate at January 2009\u2019s labor participation rate.<\/p>\n