Higher Employment Levels Not Energizing The Economy

Stock performance with laptop and calculator

I have written on many occasions about the economic reset which occurred somewhere around the turn of the century. Inflation adjusted family incomes and prime age employment have little changed since 2000.

I am a boomer. I have seen much better economic times. I know that demographics are part of the negative dynamics affecting the current economy. For instance, the population of the 25 to 54 age group in the USA has increased only 5% since 2000 - versus 16% for the population overall. Before 2000, at least as far back as the 1950s, total employment grew faster than population. See graph below. Since 2000, population has grown faster than employment.

Further, the employment level of this 25 to 54 prime working-age group is unchanged since 2000.

I smile when I hear economists lecturing China for them to revamp their economy from an export driven to internal consumption - but who lectured the western economies to prepare for the demographic shift. Negative dynamics need to be countered by positive dynamics. Is / were there no economic remedies to mitigate the affects of an aging population?

The big problem facing America is not the Russians, or drugs, or even immigration - but it is the economy. The government seems not know how the economy really works, and is filled with spin on what is going on, spin which satisfies a political-social agenda. This is why every Congress and administration tries to focus on the private sector - as they do not know how to manage the economy using fiscal policy. [IMO, many theories on fiscal policy seem not to work as intended].

No politician should brag about how well the economy is doing. The laws, spending and taxes (fiscal policy) come from Congress - not the President. Even funding for federal government employment comes from Congress.

The media is no better than Congress in understanding economic mechanisms.

From Business Insider:

On Monday, President Donald Trump signed an executive order freezing all federal government hiring with the exception of the military.In a press conference on Monday, White House Press Secretary Sean Spicer said that the hiring freeze was due to

It is true that the size of the federal government workforce is roughly the same as when President Obama took office, but the rate of increase of the workforce in the last two years has accelerated.

I can spin the Federal employee situation many ways - even showing how the levels are too low. Hiring freezes are not uncommon in the real world. The primary reason for hiring freezes precedes a systems review. The overall staffing levels in the government may be ok, but how the jobs are allocated may not be correct. When a new administration comes in, a top-to-bottom review is logical. Historically, USA Presidents tend to be politicians - without experience in managing large organizations.

Other Economic News this Week:

The Econintersect Economic Index for January 2017 again insignificantly improved with the economic outlook for weak growth. The index remains marginally above the lowest value since the end of the Great Recession. But there are indications of better dynamics in our index in the future. Six month employment growth forecast indicates little change in the rate of growth.

Bankruptcies this Week from Jakarta, Indonesia-based PT Bumi Resources (Chapter 15), Forbes Energy Services


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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