America's Economy

America's Economy: Not sputtering anymore

           http://www.economist.com/blogs/freeexchange/2014/10/americas-economy

Employment in America is continuing to improve. According to figures published on 10/13 by the Bureau of Labor Statistics, total employment in America increased by 248,000 in September, driven by big jumps in professional services, retail and healthcare. The unemployment rate dropped below 6% for the first time since 2008. Most importantly these figures are are proof for economists that the economy really is bouncing back.

 Deutsche Bank has already raised their forecast of annualized GDP growth in the third quarter from 3.7% to 4.2%. The labor force participation rate fell due to the fact that the demand for work is remaining high due to the higher wage rate. Labor participation is now as low as it has been since 1978. That suggests that the number of entrants to the work force is struggling to match the number of  people leaving the workplace due to retirement. In particular the baby boomer generation is full of workers that have chosen to retire later in life. This decision is not a result of monetary or fiscal policy but more to personal choice as a result to the rising expenses of parents in this age group. Expenses such as college tuition has risen dramatically in the past decades as well as high amounts of student debt, marginally in the baby boomer generation but primarily in the early 20's to early 30's age bracket. The large supply of workers is causing the wage rate to remain stagnant, which affects the average worker in our economy but also has political ramifications. For Democrats any improvement or chance at an economic bounce as a result of the positive signs in the economy who greatly improve chances in mid-term elections.This will not occur unless the average worker feels their quality of life relatively improve, this can only happen if wages stop being stagnant soon.

Some workers are at least getting longer hours. In manufacturing, the average workweek lengthened to a point it hasn't seen in 60 years. Combining the increased output of workers and the price of shale gas reaching low prices,  America's manufacturing decline seems to have been arrested and if these trends continue as they have been the decline may be partly reversed. Unemployment may reach a point where communication issues and other types of frictional unemployment cause the search for qualified employees to become more expensive, this again would not have any political ramifications by the mid-term elections.

Since the report was published, the dollar has surged to a 4-year high as investors have interpreted the data to mean that the Federal Reserve will soon begin to tighten monetary policy.

I found this article to be really interesting as it examines the relationship of the economic figures and upcoming political standing. It is very easy to lose track of how the government deals with and responds to the economy, after all the central bank and the government both have their overall success assessed by how the economy goes. I would think it to be an interesting study to see how these economic results translate or trend over the next couple years with the election in 2 years roughly. I feel that if we could more properly analyze what these figures mean then the general public will be able to make a more educated vote based on their wants/needs from the economy.