The most recent jobs report was clearly disappointing, with a dismal 38,000 net new jobs in May. Never-the-less, the unemployment rate fell again to 4.7%. At the same time, labor force participation fell to 62.6%. Throughout the “recovery”, the unemployment rate has been declining, as has labor force participation. In December 2007, labor force participation was 66% and has been deteriorating steadily since then.
Does anyone else think that this is weird? Either you’re working or you’re not. There seems to be a never ending number of opinions as to the causes behind this apparent dichotomy. Which are right, are any right, does it matter? Perhaps not. What matters is that we are not getting the economy we need to provide the opportunities that make for a strong nation.
Investors should be interested in economic growth. The most recent recovery has been lackluster at best. It is generally believed that economic growth is largely driven by increased economic activity based on improving output of goods and services. Historically, this has depended on, and led to, increased employment and wages.
All comments and suggestions are welcome.
Walter Kirchberger, CFA®
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