Steady as she Grows??

How is the US economy doing??? Last Friday, we got a glut of new information.

Factory Orders and Shipments - this has been negative for 18 months.

Here is the non-manufacturing index - still positive but a definite downward trend for the last year.

Employment - the USA only created 38,000 jobs last month.  There is also an obvious downward trend here.

BUT!!!  The Officials Unemployment Rate is at a fabulous 4.7%!

So as employment growth trails off, the unemployment rate is dropping! This is only possible because the Labour Force Participation Rate has started to drop again, from 62.8% to 62.6% last month. The US Government does not count people who give up looks for work in the official unemployment rate. From an employment perspective, they simply don't exist.

Or do they???

The number of people on food stamps (Supplemental Nutrition Assistance Program) in the USA has dropped from about 47 million in 2002, to about 44 million today.  All things being equal, it should drop below 39 million in 2020. This suggest that people are going back to work...all is well.

However, an expansion of the program in 2009 in response to the Great Recession expired in 2013. This expiration is slowly working its way across the country, on a state by state basis, cutting people off the program for administrative reasons. 

In 2016, for example, 500,000 to a million of these people will simply be cut off the program as time limits for able-bodied persons who have no children go back into effect. As noted, this roll-back has been slowly implemented across the country, and the restoration of these limits are big reasons for the reductions in the last two years. Of the about 3 million people no longer living on food stamps, it is possible that up to half of them did not get work - they were just cut off the program. 

So if people are not in the workforce, and they are not living on food stamps, where are they???  Nowhere good.

GDP Now, which very accurately estimates US GDP on an on-going basis, has GDP growth in the third quarter at 2.5%, which would be very good.  The next major revision is on June 9th...we shall see.