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Posts Tagged ‘cbo’

Unemployment Rate Tells One Story; Labor Participation Rate Determines Revenue, Federal Debt

August 8th, 2016 Comments off

Labor_Participation_Rate_CNBC_Bureau_of_Labor_statistics postedDailyBusinessNewsMHProNewsEach first Friday of the month the Labor Department’s Bureau of Labor Statistics issues its jobs report for the previous month—commonly called the U-3 number–an abundance of employment-related data, each of which has a story about the employment scene.

While the official unemployment rate held steady at 4.9 percent—called the “total unemployed, as a percent of the civilian labor force”– most economists look beyond that to what they call the U-6 number, which provides a broader perspective. That rate fell in June to 9.6 percent, the lowest level since April 2008, but rose slightly in July to 9.7 percent. It is defined as all the unemployed, plus “persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the labor force.” In other words, it is the unemployed, underemployed and the discouraged, as cnbc informs MHProNews.

Of concern is the labor force participation rate, which measures what part of the population is employed or seeking employment. That rate rose one tenth of a percent to 62.8 percent.

While job growth was only 24,000 in May, June’s numbers swelled to 292,000 and July another 255,000 jobs were added, statistics which have fueled a rise in wages following several years of tepid growth.

July’s average hourly wage rose to $25.69, while weekly wages hit $886.31.

Jobs are an important battleground in the race for the White House. Democrat Hillary Clinton has called for an increased spending in infrastructure programs, promising workers in a speech outside Denver “millions of jobs with rising incomes.”

Republican candidate Donald Trump meanwhile claims the Obama administration has allowed American companies to ship jobs overseas without creating growth at home. Trump also noted that then-Senator Clinton promised jobs in New York state that didn’t materialize.

While ten million jobs have been added since President Obama took office, it is the equivalent of about half the jobs added during Bill Clinton’s tenure in the White House, and a bit less than those added when Ronald Reagan was president.

Meanwhile, according to cnsnews, 94,333,000 Americans were not in the active labor force in July, just a bit of improvement from the 94,517,000 in June.

In July, while the unemployment rate remained at 4.9 percent, the number of those unemployed dropped 13,000 to 7,770,000, as the number of those employed rose 420,000 to 151,517,000.

The nation’s civilian noninstitutional population, comprised of all people 16 or older who were not in the military or an institution, reached 253,620,000 in July. Of those, 159,287,000 participated in the labor force, either holding a job or actively seeking one, equaling 62.8 percent of the 253,620,000 civilian noninstitutional population.

The Congressional Budget Office (CBO) issued a report in July predicting that the labor force participation rate will fall to 58 percent in 2046. The number obviously may change based on any number of demographics, a change in male and female roles, economic conditions, technological developments as well as medical breakthroughs that could increase the age of the work force.

However, if the labor force participation hits 61 percent in 2046, the higher gross domestic product (GDP) would lead to increased revenues, higher interest rates, smaller budget deficits as well as less federal debt.

Conversely, if labor participation drops to 55 percent in 2046, the slowdown in economic growth will result in larger budget deficits and more federal debt.

Finally, the CBO forecast that the labor force will grow at the average rate of 0.4 percent per year during the coming 30 years, compared with 1.5 percent from 1966 to 2015. ##

(Graphic credit:CNBC/Bureau of Labor Statistics–labor force participation rate)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J Silver to Daily Business News-MHProNews.

 

Congressional Budget Office: America Taxing Itself into Poverty

July 15th, 2016 Comments off

Crystal Ball dollar fotosearch postedDailyBusinessNewsMHProNewsIn an attempt to reach out to the 18 to 30 year old voter demographic (though she leads Trump by double, 45 percent are undecided), Democratic presumptive presidential candidate Hillary Clinton is offering free in state college education for families making up to $125,000 a year. She also advocates raising the minimum wage to $15/hr, and allow 55-year olds to purchase Medicare coverage.

As breitbart tells MHProNews, the non-partisan Congressional Budget Office (CBO) has periodically warned of irresponsible spending that has deleterious long-term effects on the solvency of the United States.

The CBO says the net federal debt’s share of the overall economy will steadily rise from “75 percent of GDP in the wake of the financial crisis, to 86 percent in 2026 and 141 percent in 2046.” That is higher than the historic peak of 106 percent of gross domestic product (GDP) at the end of World War II.

The debt future is getting bleaker: Last year the CBO predicted the federal debt would not reach 126 percent until 1940, and it is ahead of that now.

It says federal tax revenues as a share of GDP will be flat over the next ten years, moving between 18.0 percent and 18.2 percent; but in 2026 the average tax bill will increase sufficiently to raise the federal tax revenues as as share of GDP to 19.4. However, the CBO estimates that the higher tax rates will dampen economic activity, reducing overall tax revenue.

This will also reduce the Gross National Product per person from an average of 1.9 percent over the last 50 years to 1.3 percent annually over the next 30 years.

Mounting debt will reduce national saving and income, increase government’s interest bill, put more pressure on other aspects of the budget, limit the ability of the government to respond effectively to catastrophes and wars, and perhaps spur a financial crisis.

According to breitbart, “Given that the self-serving federal bureaucracy usually advocates for an increase federal tax rates, a warning from the respected CBO that high tax rates are about to impoverish America will have a significant influence on future public policy debates.” ##

(Image credit: fotosearch–moneyed crystal ball)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J Silver to Daily Business News-MHProNews.

CBO Projects Two Different Possible Economic Outcomes

August 23rd, 2012 Comments off

According to the nonpartisan watchdog the Congressional Budget Office, if Congress cannot act to avoid the current fiscal tightening, economic growth will shrink by 0.5 percent in 2013, and unemployment will rise to 9.1 percent from 8.3 percent today. As MHProNews has learned, the economic consequences of fiscal tightening in 2013 are illustrated in two possible, distinct scenarios shown here on CBO’s website.

(Image credit: totalmortgage)