by Calculated Threat on 12/31/2024 01:13:00 PM
Earlier I posted some questions on my weblog for subsequent yr: Ten Financial Questions for 2025. A few of these questions concern actual property (stock, home costs, housing begins, new residence gross sales), and I posted ideas on these within the publication (others like GDP and employment will likely be on this weblog).
I am including some ideas and predictions for every query.
Here’s a evaluation of the Ten Financial Questions for 2024.
4) Participation Price: In November 2024, the general participation price was at 62.5%, down year-over-year from 62.8% in November 2023, and under the pre-pandemic degree of 63.3% in February 2020. Long run, the BLS is projecting the general participation price will decline to 61.2% by 2033 as a consequence of demographics. What is going to the participation price be in December 2025?
The general labor drive participation price is the share of the working age inhabitants (16 + years outdated) within the labor drive. A big portion of the decline within the participation price since 2000 was as a consequence of demographics and long-term tendencies.
The Labor Power Participation Price in November 2024 was at 62.5% (pink), down from the pre-pandemic degree of 63.3% in February 2020, and up from the pandemic low of 60.2% in April 2020. (Blue is the employment inhabitants ratio).
From February 2020 to April 2020, 12 million individuals had left the labor drive as a result of pandemic. By November 2024, the labor drive was about 4 million increased than the pre-pandemic excessive.
For individuals who comply with the family survey employment quantity together with the nonfarm payroll survey numbers, it’s price noting that the housing survey numbers are “controlled” to the most recent Census inhabitants estimates and one-year forward projections. As such, the 2024 family employment numbers are “controlled” to the Classic 2023 employment projections for 2024. The Classic 2023 projection for YOY resident inhabitants progress from December 2023 to December 2024 was 1,724,847, in comparison with the Classic 2024 projection over this era of two,745,741. As such, when the family survey employment estimates for the top of this yr are revised in January to replicate inhabitants benchmark revisions, one ought to count on a large upward revision.
It will revise up the variety of individuals employed within the family survey nonetheless this won’t impression the participation price.
The second graph exhibits the participation price for “prime age” employees (25 to 54 years outdated). The 25 to 54 participation price was at 83.5% in November 2024 Crimson), above the pre-pandemic degree of 83.0%. This implies the entire prime age employees have returned to the labor drive.
Since virtually the entire employees impacted by the pandemic have returned to the labor drive, demographics would be the key driver of the participation price in 2025 (barring some unseen occasion). Demographics will likely be pushing the participation price down over the subsequent decade, so, my guess is the participation price will decline to round 62.2% in December 2025.
