Recently, Tim Duy wrote an interesting piece entitled “Yes, I am Optimistic” wherein he stated that:
“The lesson no one wants to draw from this recovery is that the US economy is both stronger and more resilient than commonly believed.
Do not dismiss the real improvement in the economy since 2009. It is not unimportant that 2014 is likely to be the biggest year for private sector employment…”
Tim is correct, the current run in monthly employment gains is currently one of the longest in history. It has also been suggested by the Federal Reserve that as the economy approaches “full employment” it will need to consider hiking overnight lending rates.
This is truly great news for an economy that is now more than six years into an economic recovery following the “Great Recession of the 21st Century.”
However, what is either missed, or just ignored, is the rather large group of individuals that have disappeared from the fabric of the economy and, while still alive, are simply ignored by current statistical measures. Let’s do some math using data provided by the Bureau of Labor Statistics. [Note: I am only using the population between 16-54 years of age to eliminate the argument that “baby boomers are retiring” in droves, even though more individuals than ever, over the age of 65, remain employed.]
Just for comparative purposes here is the same calculation at the turn of the century (January 1st, 2000):
Here is what it looks like graphically:
Of course, here is the real problem. There are currently more than 93 million individuals that are simply no longer counted as part of the labor force.
You can see the clear surge in this group of individuals that began late in the Clinton years when the definition was changed to exclude all individuals unemployed longer than 52 weeks. This created an unintended consequence following the financial crisis as large chunks of the population have remained unemployed longer than 12-months as unemployment insurance was extended to 99 weeks.
