Two Bits of Economic “Good News” . . .
. . . one short-term, and one long.
The short-term “good news”: the US labor participation rate for April was 62.8%. That was indeed a slight increase from the previous month – and was slightly less than it was this month 37 years ago during the middle of the Administration headed by that “truly wonderful” POTUS, Jimmah the Clueless Jimmy Carter.
Of course, longtime TAH readers know that is NOT exactly good news. Due to normal population growth, that also means we now have a record number of Americans eligible for the civilian labor force who aren’t even trying to work. The estimated number not working today who could be is 93,140,000.
The labor participation rate for US women is also at a 27 year low. Due to population growth during the last 27 years, that in turn means the number of American women not working is also at an all-time high – approximately 56,167,000.
The US labor participation rate is probably the best single common measure of the overall performance of the US economy (and even it is not complete). It’s been stagnant – mired at Carter-stagflation levels – staying at or below 63% for the past 18 months.
Yeah, the “official” unemployment rate (U3) did go down a bit too. But the “official” unemployment rate is effectively worthless as a measure of actual economic conditions. Follow it if it makes you feel better, but it won’t tell you much.
As far as I’m concerned, I’ll get excited about the economy when the labor participation rate begins to show steady improvement over time. So far, it hasn’t. It’s been caught in Carter-doldrums territory, drifting aimlessly and without direction, for the past 18 months.
But at least it’s stopped its free-fall. That only took this clown krewe Administration close to 5 years. Even Carter’s ship of fools Administration did better than that.
Second, the long-term “good news”. Remember all those predictions that Social Security was going broke, and would have to cut benefits starting in less than 20 years? (When Social Security’s so-called “trust fund” is exhausted it becomes fully PAYGO, with outlays limited to income – which is predicted to be about 3/4 of what’s needed. When that happens, benefits in turn will be cut – or other funding will have to be found, through either more borrowing or even higher taxes.)
Well, it seems as if some Ivy League researchers – at Harvard and Dartmouth – took a look at Social Security’s future projections. Their conclusion?
Social Security’s own projections concerning it’s so-called “trust fund” appear to be biased and overly optimistic – and have been for well over a decade. The truth of the situation appears to be worse.
Specifically, the researchers found that Social Security’s estimates of their trust funds’ financial health have been overoptimistic since around 2000. (emphasis added)
“After 2000, forecast errors became increasingly biased, and in the same direction. Trustees Reports after 2000 all overestimated the assets in the program and overestimated solvency of the Trust Funds,” wrote the researchers, who include Dartmouth professor Samir Soneji and Harvard doctoral candidate Konstantin Kashin.
The “so what”? The Social Security “trust fund” is what will temporarily make up the difference between Social Security’s tax income and benefits paid when Social Security’s tax income falls below outlays (and yes, Social Security is funded by current taxes – they’re called “FICA taxes”, and are assessed on the first $119,000 of wages earned). That will happen in a few years (2019 is the current projection), which means the fund will start being tapped in then. And Social Security itself projects that “trust fund” will be depleted by 2033.
But if the “trust fund” isn’t in as good a shape as we’ve been told . . . it will likely be depleted earlier. How much earlier? Unknown.
Bottom line: Social Security’s “trust fund exhausted” point might well be considerably closer than the the Social Security Administration’s own projected date of 2033. Joy, joy.
Sorry for the “bummer” article today, but it’s better to be told the truth up-front than to get blindsided by reality.
Category: Economy, Government Incompetence
It’s a good thing I never counted on SS to be more that beer and poker money when I retire.
NHSparky…A big ROGER THAT!
Oh man, I better start saving those nickels and dimes NOW if we are going to retire in two years. I figure by then we could have what, 200 to 250 bucks in loose change laying around. I mean, we’re talking some real money here if we start now. Yea sure that will get us to 80 years old. Whew, thanks Hondo, I feel better now. I’ve already worked out an Excel spreadsheet on the change and it looks pretty good! /sarc off/
There is always something wrong with a system that rewards the ultra-rich. And gives the poor incentive to to sit on its ass. Or as my Nero Doc said, now the middle class can’t afford to see a Doc but the welfare turds can…. WTF WTF. WTF !!!!!!!! Is wrong with this picture. The thing that scares the hell out of me is Hilary may win because the republicans don’t seem to understand the demographics are changing. And we seem to be heading to or trying the banana republic model, For a economy…. the last 6 years should prove to all the Dems don’t care about the middle class. The 70 percent of people that vote don’t have a clue until it hits there wallet or personal freedoms !!!!!!!
“There is always something wrong with a system that rewards the ultra-rich.” I’m not at all sure what you mean by that or who you have in mind. In comparative and relative terms, you are ultra rich. I’m thinking of people whose idea of home renovating is changing the thatched roof. In terms of social security, the ultra rich paid into the ‘trust’ like everyone else who worked. Whether anyone thinks they “need” the money is not anyone’s business. It’s theirs–until the law changes and it’s taken from them or denied to them.
2/17 Air Cav. I guess what I’m trying to get across is the last six years has been a golden age. For a few banks and people that don’t seem to want to play by the rules. And the common denominator is almost everyone seems to have a lot of money tied up. With the current Regime or a former one back in the 90s. That what I’m trying to get across haven forbid the news won’t do any good reporting on it instead let’s focus on police.
As long as Social Security remains in the clutches of DC politicians and bureaucrats, it’s gonna be TARFU at best, just like Medicare, Medicaid, and the VA.
And two more bits of news:
I have gold bullion coins to hand out to all my friends and flaming albino horned monkeys will fly out of my ass at midnight!
Oh, sorry!
That is all!
Wow, Master Chief. Have you perhaps tried a fiber supplement?
I was wondering if it was some xtra-spicy Thai or Indian food that might have caused the “flaming monkey” problem . . . .
gotta pick some nits on the figures… if that 93,140,000 people is the remaining 37.2% of the populace after the first working 62.8% – that assumes a work force of around 250,000,000. If the total population is around 320,000,000, that would only leave about 70,000,000 ineligible to work due to being too young, too old, handicapped, etc…. that sounds suspiciously low.
David: no, those numbers are accurate. But the approx 70M number you quote above doesn’t represent exactly what you describe. The precise definitions here are important.
The US Civilian Noninstitutional Population is the fraction of the US population that is 16+ years of age and is neither serving on active duty with the US military nor currently institutionalized. Disability status, age, etc . . . , does not matter; what matters is whether the person is institutionalized or in the military.
The US Civilian Labor Force is the percentage of the Civilian Noninstitutional Population that is working or who have actively looked for work during the past 4 weeks. (People who have a job and are awaiting a by-seniority recall after a layoff need not have looked for a job during the past 4 weeks). Persons not actively looking for work for whatever reason are not considered part of the Civilian Labor Force. This includes retirees, the disabled, those who have given up and quit looking, etc . . . .
The Labor Force Participation Rate is the US Civilian Labor Force divided by the Civilian Noninstitutional Population.
The latest estimate for the US Civilian Labor Force is 157,072,000. Since the current Labor Force Participation Rate is 62.8%, that 157,027,000 represents 62.8% of the current Civilian Noninstitutional Population. Doing the math gives a figure for the latter of about 250,115,000. For a total population of approx 320M, that in turn means we have around 70M who are (1) under the age of 16, (2) currently serving on active duty in the military, or (3) who are institutionalized.
http://www.bls.gov/dolfaq/bls_ques23.htm
http://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=LN_cpsbref1
http://www.bls.gov/bls/glossary.htm#L
What that means is that we have 93+M people today who are over 16 and are in theory available to work, but for whatever reason (old age, school, disability, voluntary retirement, discouragement, whatever) are neither working at a paying job nor actively looking for one.