The US economy is in the middle of 35-year-long period with depressed economic conditions

A year and a half ago we presented a description of secular fall in the labor force participation rate, LFPR, measured by the Bureau of Labor Statistics. The LFPR (the portion of people in labor force) for the working age population (16 years of age and over) has been on a long-term decline since 1995. We predicted the fall down to 59% by 2025. Here we revisit this projection and find that our forecast was correct – the rate has decreased by 0.7% (from 64.4% to 62.7%).

Following the Kondratiev wave approach (Russian economist Kondratiev introduced long-period (50 to 60 years) waves in economic evolution – see Figure 1) we interpolated the observed LFPR curve by a sinus function with a period of ~70 years. We added 18 LFPR readings published since July 2013 and show the updated curve in Figure 2. New data follow the predicted curve up.  Figure 3 illustrates the past 15 years. The trough of the model function is expected in 2030 and the bottom rate in 58.5%.

The US economy is in the middle of the 35 years long period with depressed economic conditions. Any recovery can be just transient.  Do not trust good news – the US economy is still stagnating as low GDP growth rate and very low inflation prove.  

Figure 1. The Kondratiev wave

Figure 2. The actual LFPR curve (red) and that predicted by sinus function with a period of ~70 years.

Figure 3. Same as in Figure 2 for the past 15 years.