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Fed, Fishing, Labor Data

David Kotok profile picture
David Kotok

We thank readers for comments on our Sunday morning piece about the Fed and the risk of policy mistakes. For those who missed it, the link is here. For those who missed my colleague Bob Eisenbeis's piece on Fed policy, here's the link.

Bob raised a technical question internally, which we will share with readers.

Bob Eisenbeis weighed in on the unemployment questions addressed by Philippa Dunne and Doug Henwood in our Sunday morning piece:

"I have long argued that looking at new claims without reference to the size of the labor force gives a misleading picture. Yes, the number of initial claims in relation to the size of the labor force is at a historical low. But on the flip side, if the economy created jobs at the same rate today that it did between 1960 and 1970, the jobs number should be four times what it is. Similarly, moving the reference date to 1983-2006, the number should be two times what it is now."

My conversation with Philippa Dunne focused on the falling labor participation rate. Why is it falling? Where is it headed? I asked if we could see an unemployment rate below 3% while the participation rate trends down to 60%. Those would be remarkable numbers. Ten years ago, we would have thought them impossible. Now, we are getting close. So, at the suggestion of Bob, we went digging deeply into the weeds. Our effort yielded some interesting numbers.

Readers are invited to look at the changes in the labor force participation rate when examined by gender and by age. The changes are revealing. Folks above 50 have a rising participation rate, while young folks have a falling rate. Here is the link to the fully detailed table at the Bureau of Labor Statistics.

Bob and

This article was written by

David Kotok profile picture
David Kotok co-founded Cumberland Advisors in 1973 and has been its Chief Investment Officer since inception. David’s articles and financial market commentaries have appeared in The New York Times, The Wall Street Journal, Barron’s, and other publications. He is a frequent contributor to Bloomberg TV and Bloomberg Radio, Yahoo Finance TV, and other media. He has authored or co-authored four books, including the second edition of From Bear to Bull with ETFs and Adventures in Muniland. He holds a B.S. in economics from The Wharton School of the University of Pennsylvania, an M.S. in organizational dynamics from The School of Arts and Sciences at the University of Pennsylvania, and an M.A. in philosophy from the University of Pennsylvania.David has served as Program Chairman and currently serves as a Director of the Global Interdependence Center (GIC), www.interdependence.org, whose mission is to encourage the expansion of global dialogue and free trade in order to improve cooperation and understanding among nation states, with the goal of reducing international conflicts and improving worldwide living standards. David chaired its Central Banking Series and organized a five-continent dialogue held in Cape Town, Hong Kong, Hanoi, Milan, Paris, Philadelphia, Prague, Rome, Santiago, Shanghai, Singapore, Tallinn, and Zambia (Livingstone). He has received the Global Citizen Award from GIC for his efforts. David is a member of the National Business Economics Issues Council (NBEIC), the National Association for Business Economics (NABE), has served on the Research Advisory Board of BCA Research and is currently on the advisory board of RiskBridge Advisors. He has also served as a Commissioner of the Delaware River Port Authority (DRPA) and on the Treasury Transition Teams for New Jersey Governors Kean and Whitman. Additionally, he has served as a board member of the New Jersey Economic Development Authority and as Chairman of the New Jersey Casino Reinvestment Development Authority.

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