US job growth remains slow as Boomers leave the workforce

Uncategorized

SHARE THIS STORY

US jobs Jun13.pngLast week’s US jobs report contained some good news, but not very much:

• Employment inched up again to 136m. This is still below the 2007 peak of 139m – and never before has the number of jobs failed to rise over a 6 year period
• Equally, disposable income fell back in Q1 to $32.5k, below the 2008 peak of $33.8k. Income has always risen over a 5 year period since 1951

The reason is shown in the charts above of labor force participation rate, which measures the proportion of over-16s in work:

• The overall level (blue line) was only 63.4%. It rose steadily from 1973, but peaked at 67.3% in 2000 and is now back at 1979 levels
• The reason is that the women’s rate (red) went into long-term decline in 2000, after nearly doubling from 33% in 1948, and is now back at 1990 levels

The women’s rate is particularly important for consumer spending. This is because the rise in dual income households was a critical part of the demand SuperCycle from 1983 onwards, as the BabyBoomers reached the 25-54 peak consumption age range.

Women were then joining the workforce in record numbers, boosting consumer spending power. Their wage levels were also rising steadily relative to men due to the Equal Pay Act of 1963. But 2000 saw the trend come to an end, as this marked the moment when the oldest Boomers, those born in 1946, began to join the New Old 55+ group.

This is when spending becomes replacement based, as the the Boomers already own most of what they need, and the kids are leaving home. Equally they have to save more and spend less, due to their extra decade or more of life expectancy compared to previous generations. And since 2005, women’s earnings have plateaued at 80% of men’s.

Policymakers’ stimulus and liquidity programmes cannot do anything to reverse these critical trends. Even the Federal Reserve might therefore have to accept one day that it cannot magically turn low-spending 55-year-olds into high-spending 25-year-olds.

PREVIOUS POST

Global auto sales up 3%, as China's luxury market stalls

12/06/2013

Last week’s US jobs report contained some good news, but not very much: ...

Learn more
NEXT POST

10th ICIS Innovation Awards now launched

15/06/2013

Last week’s US jobs report contained some good news, but not very much: ...

Learn more
More posts
$60bn opportunity opens up for plastics industry as need to eliminate single-use packaging grows
17/03/2019

150 businesses representing over 20% of the global plastic packaging market have now agreed to start...

Read
Ageing Perennials set to negate central bank stimulus as recession approaches
10/03/2019

The world’s best leading indicator for the global economy is still firmly signalling recession...

Read
Déjà vu all over again for oil markets as recession risks rise
03/03/2019

Back in 2015, veteran Saudi Oil Minister Ali  Naimi was very clear about Saudi’s need to adop...

Read
BASF prepares its UK supply chain for Brexit
24/02/2019

BASF has been working with Ready for Brexit (the online platform I co-founded last year) as part of ...

Read
Companies and investors have just 30 working days left to prepare for a No Deal Brexit
17/02/2019

Companies across the UK and EU27 are suddenly realising there are now just 30 working days until the...

Read
The BoE’s pre-emptive strike is not without risk
12/02/2019

The Financial Times has kindly printed my letter below, arguing that it seems the default answer to ...

Read
IKEA heads into the circular world with furniture subscription trial
10/02/2019

“Once upon a time, Granny and Grandad used to go to a large shop on the motorway to buy their ...

Read
Fed’s magic money tree hopes to overcome smartphone sales downturn and global recession risk
03/02/2019

Last November, I wrote one of my “most-read posts”, titled Global smartphone recession ...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more