Exiting the work force, stage left

5/4/2012 Portland, Oregon – Pop in your mints…

Today, a couple of things occured which, on the surface, seem to contradict each other.  First, the official unemployment rate ticked down slightly from 8.2% to 8.1%.  While nothing to write home about, this generally would be seen as good news.  However, in the parallel universe of government statistics, the number itself is decieving.

Why?  Quite simply, labor participation, which, for better or worse, is the denomenator of the Unemployment rate equation, dropped to a level not seen in the US for 30 years, as in, circa 1982.

In other words, people are leaving the labor force for good or are returning to school, effectively leaving the government’s unemployment dole and joining the government’s student loan program, or what we like to think of as “ultra extended unemployment.”

In other words, the productive economy is continuing to shrink. 

While a lower unemployment rate will give both the Obama campaign something to tout and the hacks at the FED academic ammunition to speak of raising short term rates, very few people outside of the ivory halls of Washington can count this jobs report as good news.

It should come as little surprise, then, that there was a widespread drop in most markets today, save US Treasury yields, which inversly correlate with broad market drops.

The M1 money supply is expanding rapidly.  Ben’s helicopters have arrived.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for May 4, 2012

Copper Price per Lb: $3.75

Oil Price per Barrel:  $98.49

Corn Price per Bushel:  $6.62

10 Yr US Treasury Bond:  1.88%


Gold Price Per Ounce:  $1,642

MINT Perceived Target Rate*:  0.25% AWAY WE GO!

Unemployment Rate:  8.1%

Inflation Rate (CPI):  0.3%

Dow Jones Industrial Average: 13,038

M1 Monetary Base:  $2,275,100,000,000

M2 Monetary Base:  $9,832,700,000,000

However, this news came against the backdrop of