"jim" wrote in message
.. .
Ed Huntress wrote:


Until around 1978, we never had as high a percentage of the adult
population
working as we have today:

http://research.stlouisfed.org/fred2...EMRATIO?cid=12

Women became a larger part of the workforce

That's true, although it had flattened out around 20 years ago, until the
latest recession:

http://research.stlouisfed.org/fred2...0039?cid=32305

But my question is what percentage of the adult population our economy can
sustain as employed, money-earning workers. During the Clinton years, we had
a tech bubble. During the Reagan and G.W. Bush years, we had a
deficit-spending bubble. Are the employment rates we saw in those years
sustainable without some kind of bubble?

I don't profess to know. It's just a nagging question that bugs me every
time I think about trends in employment. Manufacturing is an example that
really prompts the question. As much as productivity has improved, how many
people can we realistically sustain in manufacturing jobs?



If you look at the high employment rate (64.6%)
of the year 2000 as the norm
Then current employment (58.4)
is down about 10% from the norm

But that 2000 rate is the extreme *peak*. Why should that be the norm? That
occurred at the tail end of the dot.com bubble.

During the best boom years of the 1960s, the rate was slightly less than it
is right now, at a time of economic distress. This is a very curious
situation.


But the bottom lone is consumers are not buying
which means businesses are not selling and
therefore won't be
hiring until they have some better prospects
of selling more of their goods and services

All of that is true. The question is, why?





So what do these recently high "unemployment" numbers mean? It's an
interesting question, but it's curious that the historically
unprecedented
percentage of adults who have been employed in recent years parallels
that
giant sucking sound of wealth and incomes to a minute slice of population
at
the top of the economic heap.

So current low employment would mean the opposite?
I.E. not so much money being made by that top tier

Not necessarily, but the correlation is curious, if possibly coincidental.


The middle class may not be accumulating wealth
in the form of consumer goods
But they are also not accumulating debt
And the federal deficit is where the money is going
It's not going to the top earners.

Oh, yes it is. Money is coming OUT of the federal government, as deficit
spending, and going into the general economy. And the top earners are
winding up with the bulk of it.


Of course you take away the federal deficit
and you have a full blown depression

Possibly.


I suppose if you have invested your life savings
into over-priced gold and guns and ammo
you want a depression to avoid looking silly

I don't know what they want, but I'm encouraging the paranoids to buy as
many American-made guns as they can, and to shoot lots and lots of ammo.
It's much more fun than patting your gold bars. d8-)




In other words, the high percentage could prove to be a structurally
unsustainable ratio, one which didn't appear until a severe recession
took
the gas out of an employment bubble.

No evidence that is true

I don't know. I haven't tried to find out.


what was unsustainable is the level of consumption
that produced that high level of employment
And that was unsustainable because it was financed
by private debt which can't go up forever

Certainly that is a big factor, maybe the biggest. But that's just another
type of bubble. In other words, given higher levels of saving, is out
present level of employment sustainable? Or is this the new norm? Has
productivity improvement resulted in a new, much higher level of structural
unemployment?

In fairness, I've been asking this question for over 30 years, and my fears
have yet to be realized. g But only in retrospect do I realize that our
economy has been pumped up with one unsustainable bubble after another. How
many more rabbits can we pull out of the hat? Is it limitless?


the over-valued dollar is what creates the necessity that
somebody has to go into debt if your net national exports
are -$0.5 trillion a year
The private sector went deep into debt in the last 30 years
to finance the consumption and growth and the trade deficit

But that is done now
they aint gonna do it anymore

So now what?

Good question. If you come up with an answer, let us know.

--
Ed Huntress