So, we got a little meat on the bone about the economic plans from those fighting against a third term of this economic disaster. But they missed something.
Many think the unemployment rate will go even lower than the current 5%.
I find it comical that we would take victory laps and sing the praises of this economy. If we are in recovery mode and expanding back to where we were, it has taken 77 months so far (the fifth longest recovery since 1900). Moreover, so far, it has taken longer than any recovery since World War II to reach the pre-recession supposed growth in output (according to Minneapolis Fed data).
Many strategists expect only continued good times in this economy. They may be right if we are satisfied with living in 1977. That's the last time the Labor Participation Rate was at this level.
Why do we get so excited about living in a 1977 economy? It does provide good talking points and continues to drive home this new normal of the economy - a normal with GDP growth that cannot even come close to keeping up with population growth. I believe any GDP growth less than 2.7% is a downhill slide.
I decided to look at the numbers a bit deeper. Right now, according to the Department of Labor, 157,065,000 people are participating in the labor force. According to the Census Bureau, our population is projected to reach 320,000,000 by the end of this year. In 1977, the population was 220,000,000 people, with a labor participation rate of 62.6%. According to the Bureau of Labor Statistics (BLS), that's about where we are today. But here is the problem: their numbers just do not work. So how do they come up with their numbers? They don't use 320,000,000 as a projected population growth. They don't even use the 2012 Census Bureau 307,000,000. They use 250,000,000. If they did use real numbers, the labor projections numbers would take on an entirely different color. BLS President Obama's best friend.
Here is the real math. A population of 320,000,000 with 157,000,000 participating in the labor force makes the Labor Participation Rate about 49.1% -- nowhere near 62.6%. The BLS's numbers only go back to 1948. The lowest number I found was May 1948 a Labor Participation Rate of 58.3%. I assume that it likely dropped as low as 49.1% sometime during the Great Depression or the early 1900s.
It is hard to argue with the math (I did round the numbers). And a 49.1% Labor Participation Rate is not something we should be excited about.
Part Time Jobs Also, keep in mind that we have one of the highest part-time worker labor forces in the history of this nation. But, of course, if you work two hours babysitting, the BLS counts you as having a job. Their antiquated way of doing household surveys to come up with these numbers instead of using real-time data also skews the numbers. After all, real-time data was not available in 1977, so why should we use it now? We may as well stick to the old dial-up phones and surveys.
Yet we continue to get excited
As we think about the presidential candidates for 2016, we need to start considering which ones have an economic plan that can improve a 49.1% Labor Participation Rate. If we continue to be naïve enough to buy into this "new normal" the ideology of this government, this administration and main street media is so excited about, we may never see any real GDP growth. In fact, it might be next to impossible to see any growth above 3%. And I have not even talked about the lack of wage growth.
Think about the payroll taxes the government is missing because of the low participation rate. At some point, something will have to be done to generate revenue for a bloated government that continues to swell . . . unless, of course, we are interested in empowering and more social control.
I understand we have never seen a recession like this one. I also understand we have had no fiscal policy coming out of Washington on either side of the aisle for the last 10 years-at least, none that would help with this situation. I understand the Federal Reserve has had little choice but to try to stimulate the economy through monetary policy. Obviously, that has not worked. No wonder this President wants to create a new normal. He wants history to remember him as someone great. But the reality of our economy will solidify his position as the worst President in the history of this country.
Let's stop celebrating our 5% unemployment rate.
Let's look at the reality of this economy.
And let's make sure we continue to judge the economic plans that will work as we listen to the want-to-be Presidents.
And let's elect people who will do something about the Obama New Normal.