US unemployment rate decreases from 6.3% to 6.1% in July 2014

[jaichind]

US Labor Force Participation Rate mostly held flat from last month which has been the trend for several months now.

[jaichind]

US Labor Force Participation Rate mostly held flat from last month which has been the trend for several months now.

As the big baby-boomer generation retires (a group that's bigger than those who are currently entering the labour force), the overall rate goes down. If for example 4 million 65 year olds are retiring each year, and only 3 million youngsters are entering the labour force - it will decline by 1 Mio. each year due to demographics.

Sigh.  We seems to re-ligate this every time unemployment numbers come out.  Yes, you are right about the generational trends.  But one easy way to account for that is to look at Labor Force Participation Rate by age bracket, especially working age bracket.

                    Jan 2000    Jan 2009      Mid 2013     Mid 2014
Age 25-34     84.5%          81.4%          81.3%        80.8%
Age 35-44     85,1%          84.0%          82.6%        82.3%
Age 45-54     82.9%          82.0%          80.1%        79.8%

We are in worse shape in terms of labor participation now than a year ago and significantly worse than Jan 2009 let alone Jan 2000.

[jaichind]

     So the President's proponents trumpet the numbers and his opponents illustrate the hidden problems that they do not reflect. If the roles were reversed and we had a Republican in the White House, I could just as easily see the roles of the posters in this thread being reversed.

Not true.  See something I wrote back in 2004.

Unemployment's down to 5.6 and shrinking. Not as low as people thought it might go, but that's good because the Fed won't mess with the bond rate. The economy is on the way up. Eventually we should reach a boom, probably early next year.

The issue I'm most worried about is WMD. Bush is now saying that we might have been wrong in Iraq, but he didn't do it purposefully if so, and there were still perfectly good reasons to go to war (better ones actually, Saddam supported terror, was a monstrous dictator who had to go as soon as possible, and his fall could spur a democratic outburst acroos the Mideast.) This is actually a decent argument and if it is the major issue, Bush will win reelection. BUT though it is not a real political problem, it could be a policy problem. Say the ayatollahs are on the verge of acquiring a warhead. Bush says we must consider military options, and the media and the libs will go, "fool me twice, shame on me". Effectively it could make it politically impossible for the USA to save the Middle East from becoming so much radioactive slag.

Bush can talk about the decrease in unemployment rate to 5.6% all he wants but the fact is that total labor participation rate is still just 66.1%, no higher than most of last year.  While 112,000 jobs were added, about 76,000 of it are in the retail industry.  Due to a weak retail holiday season late last year, not as much retail employment did not increase much late last year and as a result the increase in retail employement in January 2004 is artifical as less surplus retail employees are laid off.  Besides, most of these jobs are low paying service jobs and reflect the fact that the structural economic problems in the US economy are unresolved.  While these problems are not the result of the actions of the Bush administration, it has do nothing to solve them and in fact make them worse on the long run.  The fact is the Bush administration is the first administration to have a net negative change in employment since the Hoover administration.

[jaichind]

Well, the frame of the time period gives a misleading view.  The fact is commodities as a whole in Jan 2000 was price lower than Jan 1990.  The best way is to look at something called Continuous Commodity Futures Price Index which is an equal-weighted geometric average of commodity price levels relative to the base year average price.  Jan 2000 value of this index was actually 27% lower than Jan 1980.  So Jan 2000 price levels reflected a prolonged period of price deflation.  Even if we took the Jan 1970 to Jan 2000 period which included large price increase of the 1970s the total rise during that period was 200% which works out to be 2.2% annually.

[jaichind]

As much as I am on the opposite camp of Krugman on so many things on the issue of inflation based on my personal experience is that the CPI is fairly accurate for me over the last decade and if anything overestimate inflation.  My unit consumer costs tend to match PCE more than CPI and PCE tends to be lower than CPI.  The reason why QE did not lead to large inflation is obvious to me.  The 2008 crisis lead to a lot of de-leveraging which had the effecting of lowering money supply which would have meant deflation.  QE which by itself would have led to inflation but these two affects seems to have canceled themselves out.  Once de-leveraging but QE continues then inflation would come back with a vengeance, in my view.