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Comment by umeshunni | Hacker News Reader

1. Business Insider is a clickbait publication. You should probably find a better source for any information.

2. Savings rate is a point in time metrics -- d/dt if you wish. A safety net would be the 'area under the curve'.

3. The savings rate is dropping because of increased unemployment and increasing inflation.

This Bloomberg piece says essentially the same thing as the Business Insider article: https://www.bloomberg.com/news/articles/2023-10-10/americans...

Unemployment is not increasing. By any measure it is near all time lows. https://fred.stlouisfed.org/series/U6RATE

Just a nitpick, there are several definitions of unemployment. Technically all are increasing (U6, which you linked is +0.3 in the last year) but you're still correct about them being near all time lows. Definitely within normal variance range and I'd be pressed to call it "increasing" from a point of worrying rather than a "well technically" point. (this is why I hate when people are like "x has risen <huge number>%!" -- or decreased -- because it doesn't matter if the numbers are still low. +7.5% increase in unemployment sounds like a lot but it isn't because the baseline is still low. +7% of 6.7% is very different than +7% of 10%)

https://fred.stlouisfed.org/release/tables?rid=50&eid=4773#s...

So is the labor participation rate over the same time period: https://fred.stlouisfed.org/graph/?g=1b4eJ

As boomers exit the labor market, jobs free up. That may not be the only explanation but it's likely part of it.

> So is the labor participation rate over the same time period

Yes, because the denominator for labor force is the population over 16, on the premise that people age into "working age", but never age out of it, a demographic bulge entering the age range at which people both retire if they can, and frequently become unable to work even if they can't afford to retire, drops labor force participation rate when you don't have a similar demographic bulge entering working age.

The prime age labor force participation rate (the LFPR with a denominator based on prime working age having not only an entrance age of 16 but also an exit age of 55) is not low, in fact, its the highest its been any time since the dotcom bubble burst in 2001. So, yes, the low overall LFPR is entirely explained by "we have lots of old people".

https://fred.stlouisfed.org/series/LNS11300060

Here is a different calculation:

Number of people employed 2019(pre-pandemic)/2023: increase of 1.9%

Population of the USA 2019/2023 (estimates): increase of 3.5%

The situation could be the same of better (ie: it's possible the population is younger and we should account for that); but clearly the job market is doing worse (regardless of population) per-capita than in 2019. This will have inflationary effects (things are more expensive, more disruption of services, etc...) as there are more new people in the country than people working.

The way the U6 rate has been gamified, it'll probably be useless as a metric by the end of the decade.

> This will have inflationary effects (things are more expensive, more disruption of services, etc...) as there are more new people in the country than people working.

It's more or less the opposite (though with some of the same concerns); this is driven by an _aging_ population. The population is going up due to birth and immigration, but faster than that is happening, people are aging out of the workforce.

This is pretty much what all developed countries are facing; the US isn't as far along as most (it's relatively young).

I like this headline on the economics page of BI: Taylor Swift and Beyoncé won't prop up the US economy much longer, with Americans' COVID-era savings running dry

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