The economy is teetering despite unemployment drop

New York Post Business By John Aldan Byrne – June 25, 2017

 

The US economy is teetering, despite what the job and stock markets are telling you.

The scariest set of economic indicators to emerge in decades shows what’s crushing the dreams of record numbers of young, middle-class and older Americans.

“There are troubling indicators,” said Aparna Mathur, a resident scholar at the American Enterprise Institute.

While nationwide unemployment is down to 4.3 percent and the Dow Jones is on a bender, policy experts and economists like Mathur warn of disturbing signs in the real world of business and human enterprise.

One is the weak long-term labor force participation rate. That translates into about 30 percent of the US population not working, or actively seeking a job.

“It is still of concern to us as economists,” Mathur said. “Because if fewer people are working, we are less productive.”

But there are other dark holes as new data shed fresh light on America’s economy. Salaries for the average American worker have barely grown for decades, well-paid middle-class jobs are disappearing, and many of the new jobs are in the low-wage sector.

It partly explains why the American population grew at a tiny 0.7 percent last year, the lowest increase since the Great Depression, say analysts.

The official explanation, according to the American Community Survey, attributes it largely to declining birth and immigration rates.

Other analysts who have studied the data closely don’t mince their words. “The trend around recessionary times in our economy is for the birth rate to actually drop,” said Russ Zalatimo, managing partner at HudsonPoint Capital.

According to the US Census Bureau and other sources:

• Fewer 20-somethings are tying the knot and buying that picket fence in the suburbs. In the 1970s, 8 in 10 people were married by 30. Today, it’s not until age 45 that folks reach the 80 percent mark.
•  A record 1 in 3 young people, or about 24 million 18- to 34-year-olds, boarded in their parents’ home in 2015. One in four of them neither work or go to school.
•  More young men have hit rock bottom. In 1975, 25 percent of males 25 to 34 had incomes of less than $30,000 per year. Last year, that surged to 41 percent (incomes for both years in 2015 dollars).
• More retirees are living longer, and hoarding wads of cash, which puts a huge crimp on national consumption as more boomers exit the workforce. Mathur says a new approach to prepare workers for the changing needs of a more high-tech labor market, which includes good jobs in manufacturing, is one step. Zalatimo said a generous tax break for the middle class could help spark an economic recovery.

According to the Tax Policy Center, Trump’s tax reform could result in overall tax cuts of $6.2 trillion over the next decade. Zalatimo said that will be beneficial regardless of how tax rates are amended.

Manufacturing is not exactly dead, say analysts. But it is no longer dominated by smokestacks and rudimentary assembly. “About 360,000 jobs in US manufacturing are vacant and not being filled — and employers are saying, ‘We want people to fill them,’ ” Mathur said.

With the Trump White House scrambling to advance various measures to fuel economic growth — tax reform, infrastructure spending, keeping jobs from fleeing abroad — some analysts say more radical steps are urgently required.

Mathur says a new approach to prepare workers for the changing needs of a more high-tech labor market, which includes good jobs in manufacturing, is one step.

Zalatimo said a generous tax break for the middle class could help spark an economic recovery.