Economics, Pethokoukis

Is the U.S. economy on the right track? 3 charts give a worrisome answer

We had a flurry of bad economic news last week. And we have a critical — both economically and politically — jobs report coming up Friday. So I thought I would pull back the camera a bit and look where the recovery stands:

1. The output gap — the difference between where the economy would be if it was recovering normally (the blue line below) and where it actually is (the red line) — remains a gaping, unhealing wound:

 

2. The number of working age Americans who are actually working, as a share of the total population, is dead in the water:

3. The U.S. labor force as a percent of the civilian noninstitutional population remains in a death spiral:

And you know what’s really bad. Next year doesn’t look any better, as this JPMorgan forecast suggests:

 

 

6 thoughts on “Is the U.S. economy on the right track? 3 charts give a worrisome answer

  1. Question:

    Looking at chart 3, it appears the CIVPART has been declining overall since 2000. Could it be that the current trend is not a cause of the recession, but merely accelerated by the recession?

      • Boomer retirement is causing part of the downward trend, but it has accelerated in the “recovery.” Jimmy P often addresses this effect in his analysis of the unemployment data – look for it Friday.

  2. S&P Index Commentary: Stock Buybacks Surge In The Second Quarter

    On Sept. 20, S&P Dow Jones Indices announced that preliminary S&P 500 stock buybacks increased 32.6% to $111.7 billion during the second quarter, up from $84.3 billion in the first quarter (see table 1). The year-over-year gain was a modest 2.3%, as the index reversed the prior two quarters of reduced buybacks. Company buyback activity increased significantly during the second quarter. While the second quarter produced a 3.3% broad decline in the equity markets, companies used the second quarter to increase holdings, reduce share counts, and add support to their earnings per share
    during a quarter that set a record for operating profits.

  3. Hi, this is the first time I have ever really had a chance to see a graph like this. What does the Consumer Prices (%oya) really mean when that number goes down? The prices go down because there isn’t any new inventory (according to your graph)? Why does it seem to say that prices could be lower? I realize that profit needs to be made somewhere. Shouldn’t the P in GDP be changed to profit just to give the impression that there isn’t really a recession when it looks more like inflation (or whatever the coined term is for today?) Please tell me how wrong I am!

  4. All of those projected numbers just seem to say that the economy is going to be exactly what you say it is. So what point is there to be made regarding the US’s credit rating, savings bonds etc if you are seemingly pulling numbers out of thin air? Why should I trust the government at all if they are the ones who pre-determine the prices of goods and services? Thank you.

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