U.S. Labor Force Participation Rate Plunges To Lowest Level In 45 Years

The labor force participation rate is the measure of the active workforce in an economy.

It’s an important data as the active workforce is a key driver of GDP growth.

The chart below gives the U.S. labor force participation rate.

It’s clear from the chart that the labor force participation rate has plunged to its lowest level in the last 45 years.

With an ageing population, this is a major concern for the U.S. economy. Since the U.S. economy is consumption driven, a lower number of working people can translate into a decline in per capita consumption.

In particular, when the economy is already over leveraged. The all sector debt-to-GDP for the United States is 441%.

Another point is that U.S. government debt has surged to $26 trillion. The debt burden is on the working population.

At some point of time, higher government debt might imply higher taxation. This can further reduce the consumption spending in the economy.

If taxation is not increased and government debt continues to swell, debt monetization will result in inflation taxation or invisible taxation.

Overall, the outlook is grim for the economy and inflation can potentially erode the purchasing power of individuals. I believe that consumption as a percentage of GDP has peaked-out in the United States.