Why The Labor Force Participation Rate is Dropping

Why The Labor Force Participation Rate is Dropping

It’s not because of retiring baby boomers, but rather because people in their prime working years are dropping out of the labor force.

This week’s podcast discusses the Fed’s insistence that economic recovery is just around the corner now that the bad weather is behind us and that interest rates will be raised one day.

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JM Bullion

Podcast Summary:

0:00-7:00 Introduction

The Job Market

The ADP, Challenger job cuts and initial jobless claim reports are discussed and the Fed and main stream media’s reaction to them. Whatever causes the economy or job market to do poorly is dismissed as transitory, like lower oil price or bad weather. When one person gets two part time jobs, it boosts the job numbers and gives a false impression that more people are getting jobs.

The Labor Force Participaton Rate


An overall decline in the labor force participation rate is mostly due to the decline in the labor force participation rate among 25-54 year olds since the Great Recession ended which belies the argument that the decline in the labor participation rate is because of retiring baby boomers. Indeed, the labor force participation rate among those 65+ has increased!

Civilian Labor Force Participation Rate Among 25-54 Year Olds

labor force participation rate 25-54 year old chart

The labor force particiation rate among those in their prime working years has decreased since the end of the Great Recession.

Civilian Labor Force Participation Rate Among those 65 Years Old+

labor force participation rate 65+ through april 2015 chart

The labor force participation rate among aging baby boomers has increased since the end of the Great Recession.

MORE CHARTS On the Labor Force Participation Rate

Excuses for Loss of Jobs-Blame Oil, Weather and other “Transitory” Factors

9:00-13:25 discussion of how the media can describe why the labor market is always doing better. Discussion of the reason lower oil prices did not lead to an increase in consumer spending as the Fed had predicted.

GDP in the First Quarter and Second Quarter GDP Predictions

13:25 – 16:35 the Atlanta Fed predicted a low first quarter QDP reading and their current analysis has GDP for the second quarter tracking at .8% YET Atlanta Fed President Dennis Lockhart claims the economy is “back on track” and will rebound in the second quarter and rate hikes are on the table in June.

Chicago Fed President Charles Evans also believes the economy is improving and the first quarter flat GDP was “transitory BUT says that rates should not be raised until 2016.

The War on Cash

16:35-18:25 because QE/zero interest rates and negative interest rates have not worked, central planners are now trying to ban cash. Policies today or inclined to punish saving. Cash: use it or lose it. Discussion of the economic mobility of the TV characters “the Jeffersons

Destruction of the Middle Class, the Housing Market and Savers

18:25-22:50 discussion of the housing market and millennials and their inability to purchase homes. Bailins, an under funded FDIC and zero interest rates discourage savings. Americans are not hoarding cash- they have no money to hoard. Spending isn’t increasing because people have not money to spend, not because they are saving too much.

The Stock Market as the Best Type of Casino

22:38-30:50 Discussion of the stock market as the best type of casino where the house AND players win investing in companies that don’t make money. The Fed is denying the data while claiming they are data dependent as to whether they will raise rates. The data is nearly all bad yet the Fed clings to the idea that the economy is getting better and they might raise rates.

Discussion of the lack of public awareness of the Fed and Ron Paul is discussed. Those receiving government benefits are the Fed’s/governments best customers- they get the money they are given and spend it immediately. Stimulating demand is what politicians like to preach and the excuse to intervene in the economy to create demand. QE is now an accepted monetary policy tool to support a faltering economy.

Can the “can be kicked down the road” Is that road a dead end, or can more road/credit be added?

Discussion of the difference between a housing bubble and a stock market bubble.

How Large Can the Federal Deficit Get?

30:50-32:00 discussion of how large deficits can get and how long they can be sustained. Discussion of how supply and demand dynamics can be fiddled with to suppress or augment prices.

Home Affordability

32:00- housing affordability is discussed. The rising cost of housing makes homes unaffordable and increased rents limit discretionary spending. The Dark Side of Rising Home Prices is discussed. Where do local property taxes go? Are they worth it? Homeschooling and online learning is discussed.

Discussion of media distractions and Bruce Jenner. Federally funding of college is discussed and why politicians push for it. Increasingly people are not seeing the value in a college education.

A college degree is not necessary to draw inane slogans on Starbucks coffee cups.

The Non Farm Payroll is released and discussed as the show ends.

Why the Labor Force Participation is Dropping

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Further Reading:

Why the Job Recovery is a Farce

Millennials Not Part of the Club

The Dark Side of Higher Home Prices

Top Foreign Holders of U.S. Treasuries

What Happens When the Stock Market Collapses

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