Economy | timiacono.com - Part 5

Another Measure of Participation Rate

Deep into the comments section of Ben Bernanke’s WSJ op-ed today about how he saved the world (I don’t normally read this stuff, but made an exception in this case to see how far into the 400+ comments I’d have to go before finding something positive – ultimately, I gave up) came a link to another measure of labor force participation rate from the St. Louis Fed that excludes two age groups – 16-to-25 and those 55 and over.

This is marginally better  than the BLS version that includes people 16 years and older that appeared here on Friday (i.e., a 30-year low rather than a 38-year low), but still begs the question of what fundamental factors are driving the change, that is, aside from the catch-all conclusion from the Atlanta Fed that “people just don’t want to work” anymore.

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Participation Rate Falls to 38-Year Low

Amongst the other bad news in today’s September Labor report (i.e., payrolls up 142,000 vs. expectations of 200,000 and downward revisions to prior months totaling 59,000), comes word that the labor force participation rate fell to the lowest level since 1977 (i.e., less than half-way through the decades-long transition of women entering the workforce).

Interestingly, according to the household survey, while the civilian population rose by 229,000 last month, some 579,000 people were counted as no longer in the labor force with only 23,000 of them still wanting a job.

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This Bloomberg story details the boom-turned-bust known as the surrounding communities to the shale oil fields in North Dakota, the “empty campers everywhere” comment above coming from one Tom Novak of TJ’s Autobody & Salvage who wakes up “and RVs are in my driveway”, that is, along with souped-up pickup trucks, presumably purchased by young men fresh out of high school who once drove a truck and made $100,000 a year.

There’s lots of fascinating (if unsurprising) detail in the report about the impact the boom-bust has had on the local economy (man-camp vacancy rates now as high as 70 percent) and the local government struggling to cope with it all (two-thirds of the $226 million of new debt issued by shale boom epicenter Williston, ND is outstanding).

Adding insult to injury, you have the recent debut of ABC’s “Blood and Oil”, set in North Dakota, that prompted this comment at IMDB:

Clueless

27 September 2015 | by rickmtbslag

Who ever wrote and produced this horrid show has never, ever been to North Dakota, spoke to a person from North Dakota or looked at a map to find out where North Dakota is located. They could have watched the movie “Fargo”, at the very least, in order to get an idea of the landscape and dialect of the region if they did not want to travel to find out for themselves. Here is a hint; There are no snow capped mountains in North Dakota. Its highest point is White Butte at 3508 feet. Not a single jagged peaked mountain in sight. A white moose? Really? All they had to do is a web search to find out that North Dakota is not part of the moose habitat. Takes less than a second.The producers should be embarrassed that this show made it to air. And fired.

Fed opens Pandora’s box

There’s been lots of discussion about monetary policy since last Thursday’s no-decision by the Fed on interest rates and Mike Baele, senior portfolio manager at US Bank Private Client Reserve, wonders what the central bank is thinking with its new focus on the global economy and foreign stock markets, all of which seems to have confused investors.

See also Bill Gross’ latest commentary in which he urges the Fed to move:

Near term pain? Yes. Long term gain? Almost certainly. Get off zero now!

The Fed Decision in Two Minutes

This Bloomberg video of some of Fed Chair Janet Yellen’s prepared remarks during her press conference yesterday was popping up all over the place this morning. It’s actually the first four pages of a six page opening statement(.pdf) available at the Fed’s website.

It really just boils down to about the last 10 seconds – central bankers’ fear of deflation:

… in light of the heightened uncertainties abroad and a slightly softer expected path for inflation, the Committee judged it appropriate to wait for more evidence, including some further improvement in the labor market, to bolster its confidence that inflation will rise to 2 percent in the medium term.

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