Decline in US Working Age Population vs Reported Jobs

total non farm long term 2015-11.xls

Some have downplayed while others have played up the affect the demographic shift in the US has had on the economy and jobs.  So I finally decided to do a comparison of the job situation vs the 19-64 year old working age population.

Using data provided by BLS and Census Bureau I created the above plot.  The top line is the working age population which has an obviously slowing growth rate.  The bottom lines show reported jobs using an annual monthly average and an expected jobs growth rate based on the 2007 employment peak when adjusting for the aging demographic.  You can see the estimated jobs growth line, the blue line, tails off matching the working age population line.  You can also see actual jobs are now almost inline with the expected jobs total based on growth of the working age population.

This chart both supports how incredibly slow the recovery has been, but also calls into question why the Fed has been waiting so long to raise interest rates off near zero using the very poor employment situation as an excuse, meanwhile stocks are soaring because of the cheap money used to inflate valuations with buy backs and margin buys.

Going forward I believe most will be shocked by how fast the Fed will be forced to raise interest rates as we are now nearing full employment which will drive up labor costs and drive inflation.  If things play out the way I see it in the oil patch, energy prices will soon be shooting up as well as US oil and gas production falls off as hedges expire this year.  Low energy prices may be the prime factor in holding down inflation this year, but could easily turn into the prime factor driving up inflation in 2016 and 2017.

I am short treasuries via sold call options on TLT and long TBT.