But Bloomberg reported last month that a UBS economist estimates that half of the labor-force participation rate decline is due to the aging of the workforce. How much of the other half is due to the policies of Barack Obama, as Pethokoukis would have it, or George W. Bush, under whom the recession and financial crash started, is a debate for another day.
This points to a larger blind spot in the press: That much of the economy is dictated by demographics. And it’s not just the press. Here’s the UBS economist Bloomberg quoted:
“There’s a cyclical downturn in the labor force participation rate, but there’s also a structural one related to the baby boomers that a lot of Wall Street economists are missing,” Matus said. “When you add the two up, you’re seeing this very dramatic drop in the participation rate. It might not bounce this time around.”
We like to think that stuff happens because we implemented policies that worked or backfired: X policy is the reason we have Y consequence. I guess it makes us feel good to think that what we’re doing matters more than it really does.
Sometimes there are forces out there larger than tax cuts or stimulus bills.