The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

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11/08/2017

Economists often advise people who cannot follow all the economic data each month to simply follow the monthly “jobs report” issued by the Department of Labor on the first Friday of each month, because the economy must be strong if the job market is strong.  It includes the normal monthly unemployment rate.

Some economists prefer the U-6 unemployment rate, which measures the long term unemployed.  Some politicians prefer the Labor Force Participation Rate, which measures how many people are not looking for work.  (Spoiler Alert:  Both numbers are much improved since the global financial crisis of 2008/9.)

The economic report I prefer to watch is the “Jolts Report” or Job Openings Labor Turnover Report.  Last month, there were 6,100,000 job openings in the U.S.  That is the most this century!  Businesses are finding it difficult to find qualified applicants.  If you cannot find a job now, you need to go back to school instead.  The jobs are out there waiting.

The Quit Rate seems to have stabilized at about 2.2%, which means 2.2% of the labor force quit their jobs last month.  That is the highest since 2007.  Because workers seldom quit without another job waiting for them, a rising Quit Rate means greater confidence among workers and is a good thing. Interestingly, the Quit Rate seems to have stabilized at this high level, as the average age of workers has continued to increase.  Older workers are less likely to quit than younger workers.  A younger workforce would have a higher Quit Rate.

The job market is great.  The stock market is great.  So, why do we need to stimulate the economy with a huge tax cut?

The argument is that the economy is only good, not great.  It is also argued that the job market is not truly great until average wages rise faster.  Another argument is that too many people are not in the workforce.  All of that is true, but I still don’t see how a huge tax cut will help, while I do see clearly how another $1.4 trillion of national debt will hurt us . . . and our grandchildren.

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