Quote:
Originally Posted by moorhosj
Laborforce Participation increased because women joined the workforce, not baby boomers. The baby boomers weren't part of the measurement before they were old enough to join the workforce, so that argument doesn't really pass muster. There is no need to go back 60 years, just 5 years ago we had a higher laborforce participation rate during a weak recovery. Somehow in a "booming" economy people aren't joining the laborforce, please explain as this goes against all known labor economics models. Housing starts are also down 12% compared to last year, does that sound like a "boom"? |
The US, and much of the first world, is getting hit by two big demographic shifts. People have been having fewer children the last 50 years as compared to the 50 year period immediately previous to that, and people are living much longer. As a result, the working age population is becoming a smaller segment of the population pie as compared to retired individuals, which has been and will continue to skew the labor participation rate downward. Here in the US that has been offset somewhat by immigration, thus sparing us the demographic crisis that countries such as Russia, Japan, Italy, Spain, etc. are facing (Russia's population is projected to drop by one third in the next 50 years, and Japan's by half. Even China is contending with a potential population implosion in the coming decades). But while our population will keep growing, the proportion of the elderly will continue to increase regardless due to life longevity. The labor participation rate will continue to decline, regardless of market/employment conditions, especially as the Boomers continue to retire en masse, which is a phenomenon that has been occurring for the last decade or so.
The decline in housing starts is definitely worrisome, and is definitely a canary in the coalmine for this now 10 year long bull market (one of the longest on record). That said, the economy is still doing quite well at the moment, as is justified by the Fed's consistent and frequent rate hikes and historically low unemployment rate. It won't last of course, and I'm sure a recession isn't too far off. The next 12 to 18 months could likely see a rapid slowing of quarterly GDP growth.