Recovery? Won’t Get Fooled Again

Recovery. Talking recovery today.

Big Red Car here. I’m vexed. People think that the economy is doing fine or, worse, that it is headed in the right direction. It is not.

Let me tell you why. First, say: STRUCTURAL CHANGES to the ugly face of employment.

There are four things we need to look at: total unemployment, unemployment for 25-54 year olds, the Labor Force Participation Rate for the same 25-54 year olds, and Employment-to-Population ratio for the same 25-54 year olds.

So, the hypothesis of this post is this — while America has been engaged in the weakest recession recovery dynamic in the history of the United States, the job market and the structure of our employment force has changed STRUCTURALLY.

A historic example of something like this was the wholesale introduction of women into the work force in the early 1980s. It changed things. Forever.

Big Red Car, why is this important?

Hey, stop surfing Facebook for a minute. This is important.

This is important because we have been spending a lot of time listening to, essentially, a lot of blown smoke about how many jobs have been created — total bullshit — and how we are gloriously recovering. All lies. All wrong.

Even worse, the structural changes are devastating. They are not going to change and nobody is talking about them. We are so far behind, we cannot catch up. Maybe ever.

OK, Big Red Car, calm down. You’re going to blow a head gasket for goodness sake.

Unemployment

We engage in this fictional notion that when someone is still unemployed for six months then they can be subtracted from the unemployment rolls. Who thought that up? It is madness.

Still, it looks like this.

Please note that we are still above 2007 and 2000 norms. This is after cooking the books on full power. So, the idea that we have “recovered” is still baloney.

This is the best picture of all that we shall discuss today. Do not look at U-6/7 on a full stomach. I’ve warned you.

Read the fine print above — “We would require 0.9 million additional employed to match the interim low in 2007 and 1.8 million to match the lowest rate in 2000.”

Huge, unreachable numbers in our current anemic recovery.

The 25-54 cohort

The “cohort” of 25-54 workers is our “core” work force.

Look here. I will let you read the fine print by yourself. Don’t make me regret this.

We are nowhere near where we should be in a recovery.

Labor Force Participation Rate

I don’t understand why people fail to fixate on the following two criteria — Labor Force Participation Rate and Employment-to-Population Ratio as they are the truest measure of how things are going from a macro perspective. The BLS (Bureau of Labor Statistics) and the Obama administration cannot get any lipstick on these pigs. These graphs skin it back and it stinks.

Read the fine print. Can you believe these numbers?

We would require 2,800,000 more jobs to get back to 2008 and 4,100,000 additional jobs to get back to 2000.

RECOVERY? What recovery?

Employment-to-Population Ratio

OK, here is a good one to take a look at.

Fine print it, Big Red Car.

We need 3,200,000 jobs to regain our 2007 posture and 5,200,000 additional jobs to match our 2000 numbers.

Recover, what recovery?

Can you say — “Wow, the talk about a recovery is ……………………………………………….. bull shit, isn’t it?”

So, there you have it. Hat tip to Doug Short of dshort.com, Advisor Perspectives, and Jill Mislinski. Nice work, y’all. Stole the graphs from them.

So, dear reader, what recovery are they talking about in Washington, the District of Corruption? They are fooling y’all and now they can’t do it any more, can they?

But, hey, what the Hell do I really know anyway? I’m just a Big Red Car.cropped-LTFD-illust_300.png

  • Great article BRC (@JLM:disqus). Very informative as are all of your posts typically but this one really hits a crucial nail on its sensitive, “hush, let’s not talk about this actual reality in public; may cause a panic” head.

    Reminds me of the Grimm’s Fairy Tale about the “Emperor’s Magic Suit of Clothes”. You remember how it was the child who knew of no fear and had not been warned to not speak up at what he really saw which was that the Emperor was actually parading naked!

  • Sebastien Latapie

    I’m interested in the 2000 / 2007 norms and why they are goals to hit. In each case, those low unemployment numbers were followed by massive blow ups in the economy (tech bubble and housing crisis). Would that suggest any “unsustainable” employment in those years? Is there any relationship there? I’m quite naive on this topic, but just noticed that pattern.

    • JLM

      .
      Hey, Sebastien, I am not particularly defensive about 2000 or 2007 being perfect comparisons or being exemplars we should try to reach. They are fair benchmarks as they are real, fairly current, and the data is authentic.

      I don’t think a comparison to 1928 is particularly useful for a great number of reasons.

      I do think there are a few of the comparisons — LFPR and E-to-P Ratio which are VERY comparable and useful as they are exposing a TREND.

      I don’t care about the absolute numbers, I care far more about the trend.

      “Captain, are we taking on water and are we in danger of sinking?”

      “Are we recovering or sinking?”

      BRC
      http://www.themusingsofthebigredcar.com

      • Sebastien Latapie

        The trend explanation explicitly defined makes it much clearer to me. Thank you!

  • sigmaalgebra

    Beautiful. Gorgeous. Terrific. Way overdue.

    I just do NOT get it on why our country, media, leaders, citizens are not up in arms, screaming, demonstrating, posting, etc. about this horrible situation.

    Next, the most recent significant cause was the 2008 crash. But we did that deliberately. We knew very well just what the heck we were doing. We were working hard 24 x 7, business and government, to blow a financial asset bubble. Anyone with the basic information and any sense knew it was a bubble, a really bad, unstable bubble, would likely burst, and, then, would have the usual consequences — a ruined financial system, massive deflation, a big shutdown of the US economy, on the way to the second US Great Depression, that situation spreading to our trading partners (as we quit buying from them), to massive world Great Depression, new wars, nuke wars, WWIII, this time maybe 6 billion people killed, and we knew it, e.g., the CEO of Well Fargo as in his Frontline interview I’m sure we’ve all seen. Bernanke said “I am not going to be the Chair of the Fed that presides over the Second Great Depression” or some such. So, with his obscure euphemisms printed quite a lot of money — monatary stimulus.

    So, the core idea was a case of social engineering: nice people live in nice neighborhoods, so take some poor people and, put them in nice neighborhoods and, then, presto, bingo, they, too, will become nice people, the cycle of poverty will be broken, and we will become a shining city on a hill with no old, biggie, ugly social problems. It’s a trilogy — White guilt will achieve redemption from the retribution from the old transgressions. BS.

    But, we are not solving the problem. Bernanke did a lot, but we are still stuck-o and not solving the problem. So far we have gone 8 years, 2/3rds as long as we did the last time from 1920 to 1942. Then people were shooting at us, and we solved the problem in 90 days flat — everyone had at least onejob and 2-3 if they wanted one.

    We can solve the problem in 90 days flat anytime we want to. Or we can just continue, have more lost decades, for however long, maybe until people are shooting at us again.

    Anytime we want a solution, we can have one.

    • Well said @sigmaalgebra:disqus

      “You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.” (which, erroneously, has been attributed to Abraham Lincoln by folk-lore but yet nonetheless is seemingly a fairly accurate assessment of how people behave in general towards “information” fed to them).

      Whereas “Freedom of The Press” is supposed to guarantee that we get “The facts and nothing but the facts”, in reality, the definition of what is factual depends entirely upon “what the boss wants you/us to hear”! and he/they with the gold call those shots. You have only to compare any same current affairs issue or incident reporting as offered by Fox News versus CNN to know this is true because their respective divergent versions cannot both be true when they see things through such different lens.

      Hence it is just not in the best interests of the those who really control our destiny to have “our country, media, leaders, citizens ……. up in arms, screaming, demonstrating, posting, etc. about this horrible situation”! To what “horrible situation are you referring” they would say: “We see no problem; look at the reports that we publish. All is hunky dory!”.

      In addition, denial is a powerful defense mechanism – postulated by Sigmund Freud and Anna Freud – in which a person faced with a fact that is too uncomfortable to accept typically rejects it, instead insisting that the “fact” is not/cannot be true despite what may be overwhelming probative evidence.

      Hence it is comparatively easy to mislead a fearful public with seemingly plausible pablum when the alternative would require them to actually face up to the reality of the actual “horrible situation”. Clearly, facing up to what we are really experiencing, which is already giving us cause for concern and suspicion, would undoubtedly cause a major panic in the markets and amongst the populace whereas pablum, like smoking weed or winning the lottery or drinking too much (so I have been told 🙂 ), brings us momentary relief and we go about our distractions once again trusting we are in the good caring hands of our elected leaders. And there you have it.

      BTW: You always make some very good observations whenever I see you comments whether on AVC or elsewhere.which is why I felt inclined to add my six pennyworth here.

  • This is great data. What are your thoughts on STRUCTURE of the economy? By that I mean, it’s obvious the structure has changed so what are some solutions to employment given the new structure? You mentioned women entering the workforce in the 1980’s as a game changer. I would also think that the ways in which technology has altered the economy is key to understanding how to solve the employment issue. I think that a deep understanding of the new structure is essential to determining solutions.

    • JLM

      .
      I think that tech employment — essentially a net gain to the economy — is not the problem or the solution.

      We allowed “good” jobs to be offshored. That is the reversible trend but not all of those jobs can be regained. Some of them can.

      Trump is right on this. Big kudo to Trump? Setting the agenda to be discussed in the context of the election. He has made the country delve into these global trade agreements which are bad for workers.

      We have to “teach to the test” with the test being getting a job and becoming a productive, taxpaying member of society. No more college educations that are not employment oriented.

      We have a double whammy — a taker costs money while a maker contributes to tax revenue. Double win.

      BRC’
      http://www.themusingsofthebigredcar.com

    • Dare I steal BRC’s (@JLM:disqus’s) thunder by audacious interjection in response to your question @susanrubinsky:disqus?

      AI (Artificial Intelligence), Robotics, Automation advances all taken together guarantees fewer real value-producing quality jobs paying anything relatively close to reasonable middle-class level income for all ahead except those with related skills.

      Mfg jobs dead! Will never return. Already have fully automated factories operating here and abroad ~ from raw materials input to finished consumable product output.

      Therein lies your irreversible STRUCTURAL CHANGE.

      Mantra of the ruling class may as well be “Who needs people? They want benefits: We want profits. Benefits take from our profits!”

      What the ruling class seemingly fails to understand, or perhaps has such a short term plan that this wont matter to them, is that if you are not paying decent wages to enough consumers and if credit were no longer the mode by which most consumption is occurring as in today’s market, then there will inevitably come a time when there are no more consumers with funds capable of forming a market to buy those products. End of story!

  • JLM

    .
    Are we just about there on our “recovery”?

    Ahhh, no, we are not. Read why.

    http://themusingsofthebigredcar.com/5146-2/

    BRC
    http://www.themusingsofthebigredcar.com