Can the percentage of 25-54 year-olds employed tell us anything about recessions? (Part 2) And is the current decline going to be the first without a recession?

Click here to read Part 1 from Aug. 2024. In that post I looked at what happened to this percentage in the months leading up to a recession and also looked to see when a recession happened after a certain number of months in a row of this percentage rising.

In 2024 the 12 month average was 80.717%. In 2025 the average was 80.600% (just an 11 month average due to no data for October instead of 12). Even if we gave October 80.7% (which was the highest for any other month of 2025), the average would be 80.608%. That means that the the percentage of 25-54 year-olds employed was lower in 2025 than 2024.

 

In this post I look at all the 12 month periods since 1948 that were lower than the previous 12 months (as happened in 2025 compared to 2024). In Part 1 I did not have 12 months yet that were lower than the previous 12.

 

The table below shows when the 12 month average first fell and then the month when it stopped falling. The next column shows how many months in a row the 12 month average was lower than the previous 12 month average.

 

So, for example, the average for the 12 months ending in Dec. 1949 was lower than it was for Dec. 1948. Then the 12 month average for each of the next 9 months were also lower than the preceding 12 month average. 

 

The last column shows when the nearest recession occurred. All of these episodes overlap with a recession (some explanation of this after the table) except the current episode of 2025 being lower than 2024. If we don't have a recession soon it will mean that we are in a unique case. It could be the first time the 12 month average fell without a recession.

 

Start Date	End Date	Months	Closest Recession
Dec. 1949	Sept. 1950	10	Nov. 1948-Oct. 1949
Feb. 1954	Jun. 1955	17	Jul. 1953-May 1954
Feb. 1958	May. 1959	16	Aug. 1957-Apr. 1958
Feb. 1961	Apr. 1962	15	Apr. 1960-Feb. 1961
Oct. 1970	May. 1972	20	Dec. 1969-Nov. 1970
Feb. 1975	May. 1976	16	Nov. 1973-Mar. 1975
Oct. 1980	Jul. 1981	10	Jan. 1980-Ju. 1980
May. 1982	Nov. 1983	19	Jul. 1981-Nov. 1982
Nov. 1990	Aug. 1993	34	Jul. 1990-Mar. 1991
Feb. 2001	Sept. 2004	44	Mar. 2001-Nov. 2001
Jan. 2008	Oct. 2011	46	Dec. 2007-June 2009
Apr. 2020	Aug. 2021	19	Feb. 2020-Apr. 2020
Jan. 2026

 

The first row of this table tells us that the percentage was lower for all of 1949 than it was for all of 1948. The recession did not end until Oct. 1949. So that episode clearly overlaps with a recession.

 

Also notice that there is never any case of less than 10 months. So the odds are we will see more of this right now.  One thing that is different now is that we have tariffs going up and down and immigration has been reduced. Maybe those have had or will have some effect on this. 

See US Business Cycle Expansions and Contractions from The National Bureau of Economic Research.

Also see Employment-Population Ratio - 25-54 Yrs. from The Federal Reserve Bank of St. Louis.

See What's the Sahm Rule? Alarming Jobs Report Raises Recession Risk: A key indicator has predicted every recession since 1970, and the alarm just sounded by Eric Boehm of Reason (this was from Aug. 2024). Excerpt:

"It is named after economist Claudia Sahm, who served as a top economic advisor during the Obama administration and identified a historical indicator of coming recessions in 2019: every time since 1970 that the three-month moving average of the U.S. unemployment rate is more than half a percentage point above the lowest three-month moving average from the previous year, a recession has soon followed."

The 2025 Inflation Numbers Are Finally In. Here’s the Good and Bad News.

Gasoline prices are down, but rising grocery costs continue to weigh on consumers

By Rachel Wolfe and Drew An-Pham of The WSJ. 

I have done several posts on how people have been dealing with the inflation of the last few years as well as how they have been affected. Those are listed after some excerpts from the article.  Many of the things consumers are doing involve more time and effort doing things they would not normally do. This is one of the costs of inflation, what we have to do to avoid it or mitigate it.

If you click on the link to the article you can read about some of the particular changes in supply and demand that caused these price changes. 

Excerpts:

"Overall inflation decelerated over the course of 2025, from 2.9% year-over-year in December 2024 to 2.7% last month. Core inflation, a measure that excludes the more volatile food and energy prices, fell even more steeply, from 3.2% to 2.6%."

"food-at-home prices up 2.4% from a year earlier in December, an acceleration from 2024’s increase of 1.8%."

"egg prices down by 21% in 2025."

"Coffee prices were up nearly 20% last year"

"beef and veal prices up by more than 16%."

"Subscription streaming services and videogame rentals rose 29% over the year"

"Tariffs helped drive inflation on categories in which prices increased last year: furniture and bedding, car parts and audio equipment, Barclay’s economist Pooja Sriram said."

"Apparel, for example, rose only 0.6%. Toys were up 0.8%. And new cars increased 0.5%.

Inflation in rental housing has been slowing"

Related posts:

The Middle Class Is Buckling Under Almost Five Years of Persistent Inflation: Workers growing tired of economy in which everything seems to get more expensive (2025) 

The Lengths Americans Are Willing to Go to Make Every Penny Count: From buying half a cow to watering down soap, people are experimenting with frugality—and it is affecting sales at consumer companies (2025) 

Are you hurting the economy if you bring your lunch to work? (2025)

More people are bringing their lunch to work because restaurant meals have been going up in price. Again, more tasks that people are performing to avoid inflation 

Inflation Has Cooled, but Americans Are Still Seething Over Prices: Many people—though not all—saw wage increases that kept pace with the pandemic’s rapid price hikes, but the psychological toll remains (2024)

Child Care, Rent, Insurance: Where Inflation Hits Hardest Now (2024)

Why do workers dislike inflation? (2024) 

"workers must take costly actions (“conflict”) to have nominal wages catch up with inflation" They have to bargain with or fight their employers to get a wage increase to match inflation.

Inflation Usually Hits Harder for Poor Families. For a Couple of Years, It Didn’t. New research on how inflation varies between the poor, middle class and rich paints a different picture of poverty and inequality (2024)

The Haves and Have-Nots at the Center of America’s Inflation Fight: There’s a growing gap between Americans who are battered by high inflation and interest rates and those who are actually benefiting (2024)

An Increase in Uninsured Drivers Is Pushing Up Costs for Everyone Else (2024) 

Inflation has caused consumers to choose what they need to cut back on (insurance)

Costco and Sam’s Club Aisles Are Full of Gen Z Shoppers (2024)

Consumers are buying in bulk to save money by getting a lower per unit price

Inflation is mentally taxing (2024)

Inflation is mentally taxing. Dealing with a straitened budget exacts a psychological toll as well as a financial one

Store Brands Are Filling Up More of Your Shopping Cart (2024) 

People are on the look out for cheaper alternatives due to inflation

Consumers Fed Up With Food Costs Are Ditching Big Brands (2024) 

After years of price increases, food companies say more consumers pull back; fast-food chains and snack makers plan new deals and flavors

Are Americans Worrying Too Much About Inflation? Two opposing views (2024)

The Era of One-Stop Grocery Shopping Is Over (2024)

One thing that I always talked about with inflation was that one of its costs was all the things we had to do to avoid it. Consumers are making 8% more trips to different retailers as inflation continues to upend household budgets. They are going to more stores to find lower prices. But it costs time to do that and probably more money on gas.

When workers were paid twice a day and given half-hour shopping breaks (Germany, 1923) 

By mid-1923 workers were being paid as often as three times a day. Their wives would meet them, take the money and rush to the shops to exchange it for goods. However, by this time, more and more often, shops were empty. Storekeepers could not obtain goods or could not do business fast enough to protect their cash receipts. Farmers refused to bring produce into the city in return for worthless paper. The requirements to calculate and recalculate commercial transactions in the billions and trillions made it practically impossible to do business in paper Marks.

MLB salary increase slowed to 1.4% in 2025, sets record at $4.7M

From the Associated Press. Excerpts:

"After declining to $3.68 million in 2021, a year following the coronavirus pandemic-shortened season, MLB's average has risen 28.3%"

"Players with less than one year of major league service averaged $822,589" 

"those with one to two years averaged $1,179,192."

"Among players with two to three years who were eligible for salary arbitration, the average was $1,833,386 while those in that service class not eligible averaged $1,374,760."

Averages among others in the arbitration-eligible years were $3,273,039 for the three-years-plus group, $3,932,847 in the four-plus group and $8,019,748 in the five-plus group"

"The average rose to $9,649,380 for six-to-seven-year players and peaked at $22,034,231 for 11-to-12-year players before declining to $13,703,052 for the six players with 15 or more years of major league service."

The last group will include players who were eligible to be free agents and can sell their services to the highest bidder.

I wish the article would have mentioned the median salary. That is the salary that is in the middle of the distribution. Half the players make more and half make less. A few very high salaries (like the $40 million Aaron Judge makes) can drive up the average (or mean). But giving the breakdown on salaries and year of service is good and useful, too. 

Related posts:

How Can The Average Major League Baseball Player Salary Be $3.3 Million A Year? (2010) 

How Much Is The Average MLB salary? (2021) (It was $4.17 million at that time)

Baseball’s Wealth Gap Has Become a Chasm—and Is Stretching the Sport to Its Breaking Point: As a new season gets under way, the financial disparity between MLB’s 30 teams has never been greater, alienating fans, distorting the game and making a long work stoppage all but inevitable  (2025)

Do Married Baseball Players Get Paid More Than Single Baseball Players? (2011) 

The Gold Boom Has Miners Scrambling to Find the Next Mother Lode

Record prices are breathing new life into South Africa’s ailing gold-mining industry

By Alexandra Wexler of The WSJ. Excerpts:

"For years, hundreds of illegal miners known locally as zama zamas prospected for gold on this patch of land on the outskirts of the city with hammers and chisels in hand-dug tunnels.

Now, the site has been transformed into South Africa’s first new underground gold mine in more than 15 years, part of a global rush to boost production of a metal trading at record prices."

"Around $100 million of investment is pouring into the mine, where workers now sport hard hats, carry emergency breathing devices and use advanced drills and other equipment. The project, called Qala Shallows, recovered its first gold in October and is estimated to produce more than $4.5 billion of the metal at current market prices.

Gold futures settled above $5,000 for the first time on Monday, driven by heightened geopolitical concerns among other factors. The precious metal has more than doubled in value in less than two years.

The surge has boosted profits for mining companies around the globe, encouraging them to restart old mines, expand existing operations and develop new projects. Global gold-exploration budgets increased 11% to $6.15 billion in 2025, according to S&P Global Energy."

"The industry wide rush to boost capacity is presenting challenges. It’s harder to find skilled labor and there is now a lengthy wait list for equipment, said Deysel, a geophysicist and mining engineer who has previously worked at various mines across Africa." 

The excerpt in red might imply both a movement up along the supply line and and a rightward shift in supply.

Restarting old mines and expanding existing operations could mean moving along the supply line since the firms are using existing resources. The part where it says "It’s harder to find skilled labor" implies that they are trying to use more of a variable resource.

Moving along the supply line is what happens in the short run, when one resource is fixed in quantity. By trying to add more workers and restarting old mines, there is no increase in capital in the industry.

But there could be a long run change going on here which means the supply line (actually the short run supply line) will shift to the right. I think this is implied by saying the firms want to develop new projects. That will clearly mean an increase the amount of mine space they have (I guess we could call this land). It also mentioned trying to get more equipment.

So it seems like the quantity of land, labor and capital are all changing. That means we are in the long run. 

We also expect an increase in the amount of all resources in an industry that is competitive when profits rise. Those resources are being diverted from other uses due to the higher price.

Are Monkeys More Rational Than Humans?

See The Hard Science of Monkey Business by AMY DOCKSER MARCUS of The Wall Street Journal. It is about the research that Yale professor Laurie Santos and the economic experiments she does with primates (Capuchin monkeys). Excerpts:

"The primate lab is home to 10 "shockingly smart" brown Capuchin monkeys trained to trade tokens for food. It was a short leap for Dr. Santos and her team to decide to study how monkeys make decisions about money."

"In one experiment, they gave each monkey a wallet filled with 12 flat aluminum tokens, monkey money that the animals could trade for food. Right away, the scientists saw the similarities to human behavior. When researchers slashed the price on certain foods, the monkeys sought out the best deal. They also typically spent all their cash at once and didn't bother to save.

Then researchers decided to test a more complex economic theory which shows that people do not judge price in a vacuum. Sitting with the team at the coffee shop, Dr. Santos could see how the concept worked in her own life. Many days, she feels guilty about spending $2.20 on a cup of coffee. But when she looks up at the chalk board listing drink prices, the Nutella Latte goes for $3.85 and the Ginger Snap is $4.15. "My $2 cup doesn't seem as expensive anymore," she said.

Monkeys make similar assessments. In one experiment, a researcher showed a monkey two pieces of apple but handed over one in exchange for a token. A second researcher showed one piece of apple and gave the slice to the monkey for the token. The monkeys strongly preferred to trade with the second researcher. They did not like being offered two apple pieces and then only getting one."

"Researchers wondered whether monkeys, like humans, desire an expensive item more. For the same number of tokens, the monkeys could choose whether they got a tiny square of blue Jell-O or a big chunk of red Jell-O. Later, the monkeys were allowed to choose which kind they wanted. If the monkeys were like humans, they would have gone for the blue Jell-O, the more "expensive" choice. But the monkeys gorged happily on both.

The researchers are still gathering and analyzing the data. One possibility: Human taste preferences are based on many factors, whereas the monkeys' are not. Some might argue that human economic behavior is more advanced since it includes "culture and meta-awareness" in decision-making, said Dr. Santos. There's another, less flattering possibility too. "The monkeys," she said, "are more rational.""

See also Chimpanzees are rational maximizers in an ultimatum game by Keith Jensen, Josep Call & Michael Tomasello of The Max Planck Institute for Evolutionary Anthropology.

"Abstract

Traditional models of economic decision-making assume that people are self-interested rational maximizers. Empirical research has demonstrated, however, that people will take into account the interests of others and are sensitive to norms of cooperation and fairness. In one of the most robust tests of this finding, the ultimatum game, individuals will reject a proposed division of a monetary windfall, at a cost to themselves, if they perceive it as unfair. Here we show that in an ultimatum game, humans' closest living relatives, chimpanzees (Pan troglodytes), are rational maximizers and are not sensitive to fairness. These results support the hypothesis that other-regarding preferences and aversion to inequitable outcomes, which play key roles in human social organization, distinguish us from our closest living relatives."

Related posts:

Monkeys seem to be selfish and rational (2021) (Monkeys in Bali know the most valuable items to steal from tourists to get them to trade food to get the items back)

Are Chimps More Rational Than Humans? (2007)

It reminds me of research that was done at Texas A & M some years ago. They found that rats and pigeons act rationally. If they had to press a lever so many times to get a drop something to drink or a pellet of food, they "bought" less of either one if the scientists raised the number lever pushes it took to get one. This was like raising the price. More lever pushes to get either food or drink, the less they tried to get of it. So they followed the law of demand. This was reported in Steven Landsburg's book The Armchair Economist. 

Here is the UPI article from 2007:

"German researchers have demonstrated chimpanzees make choices that protect their self-interest more consistently than do humans.

Researchers from the Max Planck Institute of Evolutionary Anthropology in Leipzig studied the chimp's choices by using an economic game with two players. In the game, a human or chimpanzee who receives something of value can offer to share it with another.

If the proposed share is rejected, neither player gets anything.

Humans typically make offers close to 50 percent of the reward. They also reject as unfair offers of significantly less than half of the reward, even though this choice means they get nothing.

The study, however, showed chimpanzees reliably made offers of substantially less than 50 percent, and accepted offers of any size, no matter how small.

The researchers concluded chimpanzees do not show a willingness to make fair offers and reject unfair ones. In this way, they protect their self interest and are unwilling to pay a cost to punish someone they perceive as unfair.

The study appeared in the Oct. 5 issue of the journal Science."