According the Veteran Employment Situation Report, the Department of Labor’s (DOL) Bureau of Labor Statistics (BLS) report on the labor market is overall disappointing given the size of the American workforce, the country needs to be creating at least 200,000 plus new jobs to have any real economic growth. After two months of job growth with July having seen 255,000 new jobs, August saw job stagnation. The economy is going back into a malaise.
The good news is that the overall veteran unemployment rate fell from 4.7% to 4.3%. This again affirms that in spite of the slow recovery in the economy, veterans are finding employment at a better rate than non-veterans!
In reviewing where the new jobs were created, healthcare is still growing but at a slower rate. Mining employment continues to fall which is a bad sign. Mining is a deep forward leading indicator for jobs and manufacturing. When mining falls, it is an indication the economy is going south.
Disappointingly the labor force participation rate remained at 62.8%, the lowest in 40 years. This is disturbing because it means 37.2% of eligible workers are not participating in the labor force. You cannot have a vibrant or growing economy when nearly 40% of your workforce is not working. They are needed for productivity, taxes, creativity, etc. Additionally, the 37.2% become a drag on the economy as someone has to pay for their housing, food, healthcare and transportation. That someone is generally the tax payers who are working.
On the economic front, the Commerce Department this past Friday released their numbers and the economy actually did slightly WORSE than originally estimated. Growth was 1.1% in the second quarter of this year and less than 1.0% for the first six months of 2016. Historically, the American economy has grown at 2.0% or greater per year. That stopped in the last eight years. The business sector of the economy is slowly sinking into recession territory, something one would not realize listening to the political pundits and candidates. Corporate profits shrunk 2.4% per the Commerce Department.
What has kept the economy out of negative territory is the consumer, but that’s only because consumers are spending more than they are earning. Consumer spending was up 4.0%, but incomes were only up 2.0%. Debt is again becoming a problem for many.
For years the polls have shown that Americans are hyper-concerned about the economy and job security. That was when the economy was growing at 2.0%. Now with the economy at only 1.0% growth, the United States isn’t just treading water, more families are being plunged underwater.
The slow recovery from the 2008 financial crisis is beyond anemic. Some of our political candidates and administration officials who keep saying how well the economy is doing seem to be living in an alternative universe. That is probably because so many of the pundits and economists live and work in Washington DC, which really is doing just fine due to federal dollars. Three of the five wealthiest counties in America are around DC. That should tell you a lot.
Another economic problem is the deficit. The Commerce Department says the deficit is now climbing again and is estimated at $600 billion this year. The red ink is headed back to $1 trillion on current course. Some states are facing 20% or more rise in Obamacare premiums this year and many health insurers are dropping out of Obamacare all together. The United States is now over $19 trillion in debt, with nearly half being racked up in the last eight years. This is a huge burden on both the economy and future generations of tax paying Americans.