By ROBERT ROMANO
In 2017, labor participation among working age adults aged 16 to 64 has jumped up to an average, annual, unadjusted 73.34 percent, up from 72.95 percent in 2016, according to data compiled by the Bureau of Labor Statistics. The trend has continued into 2018, rising to 73.47 percent.
As a result, the number of 16 to 64-year olds not in the labor force dropped 837,000 in President Donald Trump’s first year and a half in office in office, from 55.58 million to 54.75 million.
Since Trump took office, an additional 3.4 million Americans reported having jobs as unemployment sits at record lows, including among blacks and Hispanics.
That’s really great news for the economy, particularly on the labor participation side, when you consider recent history.
Since 2000, labor participation — those working or looking for work — among working age adults 16-64 has dropped dramatically, from 77.2 percent all the way down to 72.95 percent in 2016.
As a result, you had at the end of 2016 an additional 8.7 million Americans aged 16-64 out of the labor force more than would have been had the labor participation rate remained the same. Now, as the same trends have continued into 2018, that’s down to 7.7 million.
In fact, if labor participation for 16-64 year olds had remained the same as 1997, when it peaked at 77.37 percent, the measured unemployment rate would have been much higher, coming in at 10 percent in 2016 when Trump ran instead of the measured 4.9 percent. But thanks to the improving labor market conditions, now that adjusted rate is dropping significantly, too, now down to 8.13 percent.
Huge progress there. America is getting back to work and as workers are rejoining the economy.
And it’s so important, particularly to economic growth, which is still struggling to turn around.
The Bureau of Economic Analysis again downgraded the inflation-adjusted annualized growth of the Growth Domestic Product (GDP) to 2 percent for the first quarter of 2018. That’s down from the previous estimate of 2.2. percent.
Not only is that disappointing news for the Trump administration, it is so for the U.S. economy, as it still shows growth slower than expected or hoped for still a decade after the financial crisis.
And it sets the bar that much higher for the remainder of the year to get to 3 percent or 4 percent annual growth, levels not seen since 2005 and 2000, respectively.
Now to get on track for 3 percent growth in 2018, assuming 3 percent growth annualized in the third and fourth quarters, the economy will now need to grow at 4.3 percent annualized in the second quarter. That’s up from 4.1 percent with the prior revision.
To get on track for 4 percent growth this year, the economy will need a whopping 8.5 percent in the second quarter.
Since 1929, when GDP first came into use, the U.S. has grown on average 3.3 percent every year.
From 1929 to 2000, it averaged 3.68 percent growth a year.
But from 2001 to 2016, it has averaged just 1.8 percent growth a year, illustrating the very significant slowdown during that period, which includes the George W. Bush and Barack Obama administrations. In Trump’s first year, it only grew at 2.3 percent.
Meaning there are still very real challenges ahead, but in those rising labor participation numbers you can see the beginnings of the turnaround.
Now, with the Trump tax cuts in full effect, lowering individual and corporate tax rates, plus more than $300 billion of overseas profits being repatriated in the first quarter of 2018 alone, not to mention uprooting economy-killing regulations, growth could really start accelerating. That is the hope. Sometimes it takes a couple of years for all that to kick in, but it could happen faster, too.
The ongoing jobs and labor participation boom should help a lot. We just need that second quarter number to hit big.
Robert Romano is the Vice President of Public Policy at Americans for Limited Government. Americans for Limited Government is a non-partisan, nationwide network committed to advancing free market reforms, private property rights and core American liberties. For more information on ALG please visit the website at www.GetLiberty.org. You can also read more articles at www.dailytorch.com.
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