The US Labor Force Participation Rate continues to deteriorate, down again last month to 62.8%, not seen in 35.5 years.

·         In case you missed this last week, the percentage of the population “considered” to be in the labor force fell again to 62.8%, which is the lowest level since March 1978.

·         To be sure, one reason I’ve heard media pundits try to use is the retiring seniors. Well, WRONG!

·         Not only is that not the case, it’s even worse because the participation rate of seniors 65 or older has been increasing since the mid 80’s.

·         As a matter of fact, second graph below, it has grown to levels not seen since 1965.

·         I can’t measure the impact, but I can’t help but wonder what the impact of the MASSIVE funding of student loans by the Obama administration has done to keep people out of the labor force, essentially funding tuition to keep people at school.

·         I’ve also read many articles about kids moving back with their parents at levels never seen before. Which one would think is for lack of employment.

·         No matter how you look at it, this can NOT being spun into a good thing.

·         And this is precisely why I do not believe the Fed will be tapering anytime soon. Keep in mind that both Bernanke and Yellen have referred to “quality” measurements as well as reported numbers on employment improvements. With unemployment actually ticking back up to 7.3% from 7.2%, not only did we move away from the Fed’s 6.5% target for tapering, this participation rate is evidence that the “quality” of the unemployment rate is bad.

 

 

Randy Woodward

 

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