by C Hamilton
The fuel for economic growth, particularly in a nation running gargantuan trade and budget deficits, is population growth. Not any population growth, but working age population growth. It is the growth of this cohort that drives potential employment growth, potential consumer growth, potential homeownership growth. Absent that growth, the means to continue “growing” is to substitute cheaper debt, more debt, more stimulus, etc. and claim those substitutes as real growth.
Below is the critical chart…with the addition of those 2 million more jobs (this cohort lost about 14 million jobs, has regained 12 million) against a total 25 to 54 year old population which has not grown…we are at full employment. Point is, by early to mid 2022, approximately 80.5%’ish employment/population ratio will be achieved…and that is typically the end of the line where the engine simply runs out of gas. Typically, “full employment” coincides with initiation of interest rate cutting cycles, federal deficit spending, and more recently large Federal Reserve balance sheet growth (yes, just as the Fed is initiating a QE tapering and discussing interest rate hikes and the federal government is reducing stimulus?!?). This combination of full employment versus tightening is almost sure to initiate deceleration and recession.
Below, looking at the largest possible working age population, 15 to 74 year olds and those employed among them. Note the large deviation from trend line in those employed versus population, This is the declining labor force participation of the only portion of this population that is growing…the 65+ aging population. The employed assumes 2 million more employees than are presently employed against little to no population growth.
I save the most important for last. While the 25 to 54 year old population isn’t growing, the “full employment” ratio is generally flat at about 80.5%. Conversely, the still growing 15 to 74 year old population (thanks entirely to the elderly portion of this population) is seeing a continual decline in what constitutes “full employment”. Thanks to the participation levels among the 65+, full employment (and the end of economic “fuel”) will only continue to decline regardless continued ZIRP (NIRP?), QE, federal debt/stimulus, MMT/UBI, etc.
Demographics simply are and care not what the Federal Reserve or Wall Street or the White House need to bridge the ever widening chasm of an economy serving a barely growing “We the People” versus an economy twisted/tortured to serve the needs of an infinitely “growing” financial system serving “the Few”. This series of supposed financial crisis have been nothing of the sort…they are so obvious and predictable. 2022 is just the next demographic chapter where full employment is achieved. Regardless how it is cloaked via some ongoing or new version of “crisis”, be prepared because this will almost surely be the launch of unimaginable debt, NIRP, QE, UBI, MMT, and acronyms not even in existence yet. Whether it is called the “great reset” or hyper-inflation or whatever…this is the end of one historic period and the beginning of another.
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