It appears that the “animal spirits” unleashed by President Trump are not contained to the stock market: according to the BLS, one of the most notable observations to emerge from the February (and January) jobs reports is that the number of Americans no longer in the labor force plunged since December, declining by 736,000 in January (to a modest extent due to a data revision) and a further 176,000 in February. The combined two-month addition of 912,000 was the biggest drop in the “not in labor force” series on record.
At the same time, the Household survey reported that the number of employed workers, a number used in the calculation of the unemployyment rate, jumped from 152,081 to 152,528, an increase of 447.
Furthermore, a breakdown of the labor participation rate by age group shows that the recently stagnant and all important 25-54 age group has seen a notable improvement in recent months.
While on the surface this is great news for the US job market as many of those who until recently thought they would be unable to find a job, and had stopped being counted by the BLS, are once again back in the labor market, the flip side is that this sudden increase in new potential hires may keep wages suppressed longer than expected, as what until recently was observed as “lack of slack in the job market” turns out to merely have been “workers on the sidelines.”