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Labor force participation rates from the BLS, chart by MishParticipation Rate Chart NotesThe Labor Force Participation Rate is the calculated as the labor force divided by the working-age population.The Labor force is the number of people working or actively looking for work. Unemployed persons are in the labor force.Participation rates have generally been declining except for age group 60-64 and 65+ (the latter declining since 2019). In December 2019, the LFPR for those aged 25-54 was 82.9% and is 82.4% as of December 2022.That 0.5 percent drop represents 636,000 people. Eight Reasons for Labor Shortage and Shrinking ParticipationRent moratoriumsExpanded MedicaidIncrease in food stamps allocationsSome Pandemic free money shotgun blast still not spent Cancelled or postponed student debtAbandoned plans for American dream of owning a homeFentanyl and an opioid crisisCovid deaths, long-covid effects, and lingering emotional scars from a Covid lockdown.All of the above reasons reduced the marginal propensity to work. And it’s very inflationary. In addition, skilled baby boomers and Gen-X are retiring or working fewer hours. They are increasingly replaced with Zoomers who have lower skills and do not want to work as many hours.The skill replacement issue shows up in the memes of the day.Work-Related Memes Q: So why is job growth so strong?A: Is it?Huge Temporary Growth in Gig Work to Make Ends MeetA prudential survey shows a Huge Temporary Growth in Gig Work to Make Ends MeetQ: Where does one find time to take on an extra part-time job? A: By working fewer hours at their regular jobDecember Jobs: Employment Rises by 717,000 All of Them Part TimePayroll and employment data from the BLS, chart by MishOn January 6, I noted December Jobs: Employment Rises by 717,000 All of Them Part TimePayrolls vs Employment Since March 2022Nonfarm Payrolls: +2,887,000Employment Level: +916,000Full Time Employment: -288,000Full time employment is down 288,000 since March and down by 444,000 since May!Scroll to ContinueSome people call this discrepancy “noise” but it ties in with other BLS data.Employment in the Second Quarter Fell By 287 ThousandBLS Business Employment Dynamics Summary (BEDS) by the BLSOn January 25, I noted The BLS Reports Employment in the Second Quarter Fell By 287 ThousandThe monthly BLS payroll survey headline jobs number is based on 6% of the data. It’s timely but inaccurate. The BEDS report is based off the Quarterly Census of Employment and Wages (QCEW) which has 95 percent of all employers. BEDS lags the monthly report by over six months but it has most of the data. Tie This All TogetherThe anecdotal data, household survey, and BEDS all say one thing. The monthly Jobs says another. So, are jobs really strong? The data suggests that’s likely only if most of it is part-time or gig work. Demographically Sobering Thoughts on US Employment in the Next Five YearsLooking  ahead, here’s some Demographically Sobering Thoughts on US Employment in the Next Five YearsBased off demographics, I forecast very weak employment growth through 2030 and that assumes no significant employment losses due to recession.For the full year 2023, demographics suggest a gain in employment of only 300,000 and that assumes no recession.See the above link for more details.On top of it all, how the Fed can untangle this inflationary mess is a mystery. The negative impacts of QE cannot be easily undone.  This post originated on MishTalk.Com.Thanks for Tuning In!Please Subscribe to MishTalk Email Alerts.Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.If you have subscribed and do not get email alerts, please check your spam folder.Mish

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