Steel Products

SMU Steel Summit to Feature Popular Economist Beaulieu

March 28, 2018

ITR Economics prides itself on keeping the hyperbole out of its economic analysis. Proper interpretation of the facts is fundamental. In a recent ITR blog, popular economist Alan Beaulieu pointed to “facts” cited by a recent speaker to illustrate his point. Beaulieu will make another appearance as a keynote presenter for Steel Market Update’s premier event, the 2018 Steel Summit Conference, set for Aug. 27-29 at the Georgia International Convention Center in Atlanta. He will offer an insightful overview of U.S. economic trends and their implications for the steel industry.

First, Beaulieu said, the speaker cited the fact that 313,000 jobs were added to the U.S. labor force in February, claiming this was proof of ongoing rapid growth in the U.S. economy. He was using this number to prove that the second half of the year will match the first half of the year. ITR is forecasting that the economy will slow down in its rate of growth in the second half of this year. The fact is that the U.S. economy adds 313,000 or more jobs more often when in Phase C (slowing growth) than when in Phase B (accelerating growth). The bottom line is that a large number of people finding jobs is encouraging, but it is not conclusive evidence of ongoing rapid growth in the economy, the economist noted.

Second, the speaker cited that the Civilian Labor Force Participation Rate (over 16-years old) was at a record low. ITR researched this, and the seasonally adjusted (SA) figure (generally favored by government) and the not-seasonally adjusted (NSA) figure are each not at a record low as of February. The February SA rate is 63 percent, the highest it has been in 46 months and up 0.5 percent off the October 2017 low of 62.7 percent. The rate of rise is typical. The 10-year average is 63.7 percent. The U.S. is operating a little short of average but above the record-low of 62.3 percent established in September 2015. It could be the speaker was looking at the NSA results where January was a record low, Beaulieu said, but February improved to 62.9 percent. The NSA 10-year average is also 63.8 percent.

It is not easy to discern why fewer people are participating, especially with strong numbers in job openings. One theory is that people of working age are retiring “early,” either because they want to lock in social security benefits or because they hit it rich and are opting for the “good life” (or something in between), Beaulieu said. Private sector job openings and construction job openings are in typical seasonal decline off record-high levels. However, there is not a shortage of jobs, suggesting there are other reasons why the labor participation rate has not rebounded even further.

“It is always good to check the facts, and in this case the facts are different than the pronouncements. Reality is tough, but it is reality that will determine if you are making the right decisions,” Beaulieu said.

Registration is open for the 2018 event, our 8th SMU Steel Summit Conference. We welcome anyone interested in the greater steel and manufacturing industries.