87. Next Steps: My Employment and Jobs Report
Latest on my employment status, insights on the U.S. jobs report, GDP figures, inflation, end the Fed, Fox Business interview, and more from a free-market perspective to let people prosper!
Hello Friend,
I hope you’re flourishing!
Hot Take: Latest on U.S. jobs report for September, updated GDP data, and overview of how we got here and where we should be heading.
State and U.S. Economic and Policy Takes: Lots of new information to discuss along with an interview on Fox Business about the U.S. labor market and bad policies out of D.C.
Personal Take: The latest on my employment status, an upcoming event at SMU on October 12, and more.
Don’t miss my latest Let People Prosper Show episodes each Tuesday morning on YouTube, Apple Podcasts, Spotify, and Google Podcasts and please subscribe to them so you won’t miss them.
Let’s get to it!
HOT TAKE
Top Stat: Average hourly earnings (inflation-adjusted) down about 3.0% year-over-year
Key Point: The economy will get worse before it gets better because of bad policies out of D.C.
Overview: The shutdown recession from February to April 2020 and subsequent government failures caused major destruction to Americans’ livelihoods, which includes a recession and high inflation. One policy mistake was Congress adding $6.5 trillion in deficit spending since January 2020 to reach the new high of $31.1 trillion in national debt, or more than $247,000 owed per taxpayer. Another mistake is the Federal Reserve monetizing so much debt, creating 40-year-high inflation rates. These policy mistakes have resulted in an artificially inflated boom that’s busting into what will likely be a long, deep recession with high inflation. The failed policies of the Biden administration, Congress, and the Fed must be replaced with a liberty-preserving, free-market, pro-growth approach so there are more opportunities to let people prosper.
Labor Market: Today, the U.S. Bureau of Labor Statistics released a weaker U.S. jobs report for September 2022 than in recent months. The report shows that there were 263,000 net nonfarm jobs added last month, with 288,000 added in the private sector. The official U3 unemployment rate increased slightly to a historically low 3.5%, but challenges remain. These challenges include about a 3% decline in average hourly earnings (inflation-adjusted) over the last year, a 0.3 percentage point lower prime-age (25–54 years old) employment-population ratio at 80.2% than in February 2020, and a 1.1-percentage-point lower labor-force participation rate at 62.3% with at least three million people out of the labor force.
Moreover, since the shutdown recession ended in April 2020, total nonfarm jobs have increased by 22.5 million for an increase of 514,000 since the previous peak in February 2020. About 56% of these total jobs gained were during the Trump administration from April 2020 to January 2021 and 44% of them during the Biden administration thereafter. Private nonfarm jobs have increased by 22.1 million and are now up 1.1 million from the past peak. Similarly, about 6 out of 10 private jobs gained were during the Trump administration.
Adding to the concern is a “zombie economy.” This includes “zombie labor” as many workers are sitting on the sidelines and others are “quiet quitting” while there is a declining number of unfilled jobs than unemployed people. And that demand for labor is likely inflated from many “zombie firms,” which run on debt but are likely to lay off workers as costs of debt rise with interest rate increases. Small businesses slowly adding jobs in recent months and their sentiment remain near half of a century low are worrying signs.
Employment-Population Ratio (25-54 Years Old)
Economic Growth: The U.S. Bureau of Economic Analysis’ data below show a comparison of real total gross domestic product (GDP), measured in chained 2012 dollars, and real private GDP, which excludes government consumption expenditures and gross investment.
The shutdown recession contracted at historic annualized rates because of individual responses and government-imposed shutdowns related to the COVID-19 pandemic. Since then, economic activity has had booms and busts because of inappropriately imposed government restrictions in response to the pandemic, even as there is little to no evidence that these restrictions helped. However, they did severely hurt people’s ability to exchange and work.
In 2021, the growth in nominal total GDP, measured in current dollars, was dominated by inflation, which distorts economic activity. The GDP implicit price deflator was up 6.1% for Q4-over-Q4 2021, representing half of the 12.2% increase in nominal total GDP. This inflation measure was up by 9.1% in Q2:2022—the highest since Q1:1981—for an 8.5% increase in nominal total GDP. There were two consecutive declines in real total (and private) GDP, indicating a recession. This criterion has been used to date every recession since at least 1950. The Atlanta Fed’s early GDPNow projection on October 7, 2022, for real total GDP growth in Q3:2022 was 2.7%, which was a large revision up and the actual real GDP figures will be reported on October 27.
For historical comparison, the last expansion from June 2009 to February 2020 had average annualized growth of 2.3% in real total GDP and 2.8% in real private GDP. The earlier part of the expansion had slower real total GDP growth but had faster real private GDP growth. An explanation for this discrepancy is that deficit spending in the latter period grew faster, contributing to crowding-out of the productive private sector. With excessive spending bloating the national debt thereafter, especially since the shutdown recession, the Fed has monetized much of the new debt instead of allowing many interest rates to rise to a market-determined rate. This resulted in higher inflation as there has been too much money chasing too few goods as their production has been overregulated and overtaxed. The consumer price index (CPI) is up by 8.3% in August 2022 over the last year—highest rate since January 1982. After adjusting total earnings in the private sector for CPI inflation, real total earnings are flat in August 2022 since February 2020 as inflation has limited people’s purchasing power. Elevated inflation will continue until the Fed more sharply reduces its balance sheet to provide a positive real federal funds rate target.
Just as inflation is always and everywhere a monetary phenomenon, high deficits and taxes are always and everywhere a spending problem. As the federal debt far exceeds U.S. GDP, and President Biden has proposed an irresponsible FY23 budget, America needs a fiscal rule like the Responsible American Budget (RAB) with a maximum spending limit based on population growth plus inflation. If Congress had followed this approach from 2002 to 2021, the (updated) $17.7 trillion national debt increase would instead have been a $1.1 trillion decrease (i.e., surplus) for an $18.8 trillion swing to the positive that would have reduced the cost to Americans. The Republican Study Committee recently noted the strength of this type of fiscal rule in its FY 2023 “Blueprint to Save America.” And the Federal Reserve should follow a monetary rule.
Bottom Line: Americans are struggling from bad policies out of D.C., which have resulted in a recession with high inflation. Instead of passing massive spending bills, like the passage of the “Inflation Reduction Act” that will result in higher taxes, more inflation, and deeper recession, the path forward should include pro-growth policies. These policies ought to be similar to those that supported historic prosperity from 2017 to 2019 that get the government out of the way rather than the progressive policies of more spending, regulating, and taxing. The time is now for a limited government with sound fiscal and monetary policy that provides more opportunities for people to work and have more paths out of poverty.
Recommendations:
Set a pro-growth policy path with less spending, regulating, and taxation at all levels of government.
Reject new spending packages that America cannot afford nor needs; pass the RAB instead.
Enact return-to-work policies; impose strict fiscal and monetary rules—with the Fed having a much smaller balance sheet and a much higher federal funds rate target until America finally ends the Fed.
TAKE ON STATE ECONOMIES & POLICIES
More evidence for the need to eliminate personal income taxes.
Texas should eliminate property taxes ASAP! Other states should, too, as it is connected with limiting government spending at all levels.
No wonder so many people are fleeing California.
We need a better, more holistic approach to helping people in poverty.
Texas, Louisiana, and other states along with all Americans could benefit from less nonsense out of D.C.
TAKE ON U.S. ECONOMY & POLICIES
The latest U.S. jobs report should keep the Fed on track to aggressively tighten after years of highly accommodative policy. Watch my Fox Business interview with Neil Cavuto.
Oil and gasoline prices are rising again which means that the headline inflation rate will likely start rising again soon and keep underlying inflation increasing until the Fed more aggressively reduces its balance sheet.
The Fed isn’t attacking inflation by reducing its balance sheet as it should but maybe it will more soon. Let’s hope before things get much worse.
Good overview of the jobs picture by sector since the shutdown recession.
This is why so many workers feel like they can’t keep up with inflation.
PERSONAL TAKE
The family is doing well. Soccer season is in full swing for my oldest son. The first 9 weeks are almost over at the boys’ school, and they’ve been doing very well. We’ve been busy with a number of things and on the road quite a bit but things are calming down some now. The baby girl is now 6 months old and is a precious, smiling baby. We’ve had a rough year, but things are certainly starting to improve. God is good!
The big news that I want to share is after much prayer and reflection over the last month after leaving TPPF I’ve had some fantastic opportunities to advance my career and ways to let people prosper. Read my updated bio here. The first of these is that I started my business called Ginn Economic Consulting, LLC which I’ll provide consulting to think tanks on economic policy issues at the federal, state, and local levels.
I’m excited about having my own business as this is something I always wanted to do so it is a blessing to start it now. Then over the last month, I was thrilled to join remotely the Pelican Institute for Public Policy based in Louisiana as their Chief Economist where my portfolio will include budget restraint, tax reform, poverty relief, tech and innovation, and some other issues. I’ll also be working as Senior Fellow for Young Americans for Liberty where I’ll write a newsletter and be a spokesperson to make liberty win. I’ve also joined Americans for Tax Reform as a Senior Fellow to put together sustainable budgets for all 50 states that will roll out over the next couple of months. And finally, I’ll be a Senior Fellow at Texas Public Policy Foundation, Beacon Center in Tennessee, Iowans for Tax Reform Foundation, and others doing single projects here and there.
I’ll likely add more to my portfolio over time. But my vision is to fight back against big government policies by ensuring states can thrive in a laboratory of competition by working at places like Pelican Institute, by ensuring states aren’t overly dependent on the federal government through strengthening federalism by working at places like Americans for Tax Reform, and by ensuring there’s more liberty through reducing the size and scope of the federal government by working at places like Young Americans for Liberty.
This three-fold approach (states, federalism, federal issues) will hopefully do God’s will in my life to let people prosper by limiting government, preserving liberty, and enhancing economic freedom. It will take some time to balance these out and find my stride, but I’m excited about this endeavor and know that it’s God’s will for the next season of my career. Thank you for your thoughts and prayers. More to come!
I had the pleasure of joining Austin Peterson on his show (starting at 0:24:00) to discuss the high cost of travel with elevated flight and gas prices, the cause of inflation being the Fed’s excessive printing of money, and what to do after ending the Fed. #EndtheFed
If you’re in the Dallas area on the evening of October 12, 2022, please join me at this event (more info and registration here):
CLOSING TAKE
This picture has been going around with different quotes, so here’s mine. ha!
I’m praying that our light will shine for what God’s will is for each of us.