Last week we destroyed in detail the fallacy that the plunging participation rate in the US was related to demographics [4]. Despite Ben Bernanke's comments during his press conference last week that demographics play a role, it seems Fed's Dudley and Lockhart have a different view - in line with ours.
- *DUDLEY SAYS UNEMPLOYMENT RATE DECLINE `OVERSTATES' PROGRESS
- *LOCKHART SAYS A NUMBER OF EXPLANATIONS FOR PARTICIPATION RATE (as we covered here [4])
- *U.S. FED'S DUDLEY SEES 'HOLLOWING OUT' IN LABOR MARKET INCLUDING FACTORY WORKERS
- *LOCKHART: LOWER PARTICIPATION MAY MEAN LOWER ECONOMIC POTENTIAL, WHICH IS A CONCERN
What now? Instead of demographics (the aging of America fallacy), it is a 'hollowing out' of our manufacturing base and this leads to lower economic growth potential. It seems Stockman's 'born-again jobs scam' is very real [5].
[6]