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February Labor Data: On Trend – unfortunately

I track a variety of indicators, including age-specific employment-to-population data and employment relative to the normal level using census age-specific population projections. What the latest jobs data show is that we remain on our recent growth trend … which puts us back at normal employment levels in 2019. Since employment fell below trend in 2007, that implies a full “lost decade.” Now growth could pick up as we approach full employment — between depreciation, population growth and debt repayment, our housing overhang should be gone and prices firming, removing the bad balance sheets that hold back consumption. At the same time, there’s also the potentiat that something will go wrong over the next half-dozen years that will depress growth. So I’ll stick with 2019.

Note that I have a similar projection using employment less those who are working part-time because their hours were cut. That gives a larger gap but a similar rate of recover – 2019.