Wednesday, February 11, 2026

The % of 25-54 year-olds employed was 80.9% in Jan. after being 80.7% in Dec.; Average hours worked increase

One weakness of the unemployment rate is that if people drop out of the labor force they cannot be counted as an unemployed person and the unemployment rate goes down. They are no longer actively seeking work and it might be because they are discouraged workers. The lower unemployment rate can be misleading in this case. People dropping out of the labor force might indicate a weak labor market.

We could look at the employment to population ratio instead, since that includes those not in the labor force. But that includes everyone over 16 and that means that senior citizens are in the group but many of them have retired. The more that retire, the lower this ratio would be and that might be misleading. It would not necessarily mean the labor market is weak.

But we have this ratio for people age 25-54 (which also eliminates many college age people who might not be looking for work).

It was 80.6% in Jan. 2020 and 69.6% in April 2020.  Click here to see the BLS data. Here is what it was for each of the last 4 years

2022) 79.883% 
2023) 80.683%
2024) 80.717%
2025) 80.600% (just an 11 month average due to no data for October instead of 12)
 
This is only the 6th month since April 2001 when the % of 25-54 year-olds employed was as high as 80.9%.
 
The 12 month average for Feb. 2025 to Jan. 2026 was 80.6028%. For the previous 12 month average for Feb. 2024 to Jan. 2025 it was 80.725% (I used 80.65% for Oct. of 2025 when the government was shutdown-that was the average of Sep. & Nov.). Any time this 12 month average has fallen it has overlapped a recession. See my post from Feb. 5, 2026 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?.

The unemployment rate was 4.3% in Jan. after being 4.4% in Dec. Click here to go to that data. Here is what it was for each of the last 4 years

2022) 3.6%
2023) 3.6%
2024) 4.0%
2025) 4.3%
 
Labor Force participation rose to 62.507% from 62.404%. Here is what it was for each of the last 4 years 
 
2022) 62.2%
2023) 62.6%
2024) 62.6%
2025) 62.4%
 
The % of the adult population employed rose to 59.67% from 59.63% (that is people 16 years old and older).  Here is what it was for each of the last 4 years 
 
2022) 60.0%
2023) 60.3%
2024) 60.1%
2025) 59.7%  

Here is the timeline graph of the percentage of 25-54 year olds employed since 2015.

 

Now since 1948.

 

Now hours worked. This comes from the St. Louis FED. See Average Weekly Hours of All Employees, Total Private. It was 34.3 in Dec. and 34.4 in Jan. Shaded areas indicate U.S. recessions.  

  

Related posts: 

Now hours worked. This comes from the St. Louis FED. See Average Weekly Hours of All Employees, Total Private. It was 34.4 in Jan. and 34.3 in Dec. Shaded areas indicate U.S. recessions. 

"The reason for the discrepancy is that there are two surveys. The establishment survey is used for the Labor Department's monthly jobs report. They contact businesses for this survey. The household survey is used to put together the unemployment rate. The Bureau of Labor Statistics contacts households for this one."

See also Comparing employment from the BLS household and payroll surveys from the BLS.

Click here to see a good Twitter thread on the jobs report (including wages) from Harvard economist Jason Furman.

See Here are the five key takeaways from the January jobs report by Jeff Cox of CNBC. 

Tuesday, February 10, 2026

Economics in Don Quixote, Part 5: knight-errant’s squires should never negotiate their pay from the knight-errant they serve

For links to each of the first four parts, see related posts below.

Sancho feels that he is not getting paid enough by Don Quixote and asks for more money. Here is what happens. From Volume II.

CHAPTER XXVIII. OF MATTERS THAT BENENGELI SAYS HE WHO READS THEM WILL KNOW, IF HE READS THEM WITH ATTENTION

“When I worked for Tom Carrasco, the father of the bachelor Samson Carrasco that your worship knows,” replied Sancho, “I used to earn two ducats a month besides my food; I can’t tell what I can earn with your worship, though I know a knight-errant’s squire has harder times of it than he who works for a farmer; for after all, we who work for farmers, however much we toil all day, at the worst, at night, we have our olla supper and sleep in a bed, which I have not slept in since I have been in your worship’s service, if it wasn’t the short time we were in Don Diego de Miranda’s house, and the feast I had with the skimmings I took off Camacho’s pots, and what I ate, drank, and slept in Basilio’s house; all the rest of the time I have been sleeping on the hard ground under the open sky, exposed to what they call the inclemencies of heaven, keeping life in me with scraps of cheese and crusts of bread, and drinking water either from the brooks or from the springs we come to on these by-paths we travel.”

“I own, Sancho,” said Don Quixote, “that all thou sayest is true; how much, thinkest thou, ought I to give thee over and above what Tom Carrasco gave thee?”

“I think,” said Sancho, “that if your worship was to add on two reals a month I’d consider myself well paid; that is, as far as the wages of my labour go; but to make up to me for your worship’s pledge and promise to me to give me the government of an island, it would be fair to add six reals more, making thirty in all.”

“Very good,” said Don Quixote; “it is twenty-five days since we left our village, so reckon up, Sancho, according to the wages you have made out for yourself, and see how much I owe you in proportion, and pay yourself, as I said before, out of your own hand.”

“O body o’ me!” said Sancho, “but your worship is very much out in that reckoning; for when it comes to the promise of the island we must count from the day your worship promised it to me to this present hour we are at now.

“Well, how long is it, Sancho, since I promised it to you?” said Don Quixote.

“If I remember rightly,” said Sancho, “it must be over twenty years, three days more or less.”

Don Quixote gave himself a great slap on the forehead and began to laugh heartily, and said he, “Why, I have not been wandering, either in the Sierra Morena or in the whole course of our sallies, but barely two months, and thou sayest, Sancho, that it is twenty years since I promised thee the island. I believe now thou wouldst have all the money thou hast of mine go in thy wages. If so, and if that be thy pleasure, I give it to thee now, once and for all, and much good may it do thee, for so long as I see myself rid of such a good-for-nothing squire I’ll be glad to be left a pauper without a rap. But tell me, thou perverter of the squirely rules of knight-errantry, where hast thou ever seen or read that any knight-errant’s squire made terms with his lord, ‘you must give me so much a month for serving you’? Plunge, scoundrel, rogue, monster—for such I take thee to be—plunge, I say, into the mare magnum of their histories; and if thou shalt find that any squire ever said or thought what thou hast said now, I will let thee nail it on my forehead, and give me, over and above, four sound slaps in the face. Turn the rein, or the halter, of thy Dapple, and begone home; for one single step further thou shalt not make in my company. O bread thanklessly received! O promises ill-bestowed! O man more beast than human being! Now, when I was about to raise thee to such a position, that, in spite of thy wife, they would call thee ‘my lord,’ thou art leaving me? Thou art going now when I had a firm and fixed intention of making thee lord of the best island in the world? Well, as thou thyself hast said before now, honey is not for the mouth of the ass. Ass thou art, ass thou wilt be, and ass thou wilt end when the course of thy life is run; for I know it will come to its close before thou dost perceive or discern that thou art a beast.”

Sancho regarded Don Quixote earnestly while he was giving him this rating, and was so touched by remorse that the tears came to his eyes, and in a piteous and broken voice he said to him, “Master mine, I confess that, to be a complete ass, all I want is a tail; if your worship will only fix one on to me, I’ll look on it as rightly placed, and I’ll serve you as an ass all the remaining days of my life. Forgive me and have pity on my folly, and remember I know but little, and, if I talk much, it’s more from infirmity than malice; but he who sins and mends commends himself to God.”

“I should have been surprised, Sancho,” said Don Quixote, “if thou hadst not introduced some bit of a proverb into thy speech. Well, well, I forgive thee, provided thou dost mend and not show thyself in future so fond of thine own interest, but try to be of good cheer and take heart, and encourage thyself to look forward to the fulfillment of my promises, which, by being delayed, does not become impossible.”

Sancho said he would do so, and keep up his heart as best he could. They then entered the grove, and Don Quixote settled himself at the foot of an elm, and Sancho at that of a beech, for trees of this kind and others like them always have feet but no hands. Sancho passed the night in pain, for with the evening dews the blow of the staff made itself felt all the more. Don Quixote passed it in his never-failing meditations; but, for all that, they had some winks of sleep, and with the appearance of daylight they pursued their journey in quest of the banks of the famous Ebro, where that befell them which will be told in the following chapter."

Related posts:

Economics in Don Quixote, Part 1 (the "precautionary motive" for demanding money)

Economics in Don Quixote, Part 2 ("primitive communism") 

Economics in Don Quixote, Part 3 (knights never paid for lodging or anything else plus some Schumpeter)

Economics in Don Quixote, Part 4: Governor Sancho Panza Regulates The Economy

Monday, February 09, 2026

Supply of homes increases in Austin, TX and the price falls

By Chris Wack of The WSJ. Excerpts:

"Austin’s median home sale price dropped 4.2% year over year in December—the third largest decline among the top 50 metros."

"Housing markets across Texas and Florida have also slowed in recent years due to a homebuilding boom."

By "slowed" they mean 

"The typical home that went under contract in Austin in December spent 106 days on the market, Redfin says. That’s up from 91 days a year earlier."

So supply increasing leading to a drop in price is not a surprise (if demand is constant, falls or rises less than supply rises) 

Sunday, February 08, 2026

Are Rome's Attractions Scarce Goods?

See Rome’s Blundering Battle Against Overtourism: Nonresidents of the Eternal City must now pay a fee to visit the Trevi Fountain—the latest in a series of measures that prove a greater nuisance than the crowds themselves by James Gardner in The WSJ.

A good is scarce when there is not enough to go around when it is given away for free. It seems that so many people were visiting sites in Rome that it started to become much less enjoyable. Now you might have to pay to get into certain places that previously had no charge.

Excerpts from the article:

"The fountain is one of the most popular attractions in the capital, but unlike St. Peter’s Basilica or the Spanish Steps it sits in and occupies most of a relatively small space. As of six months ago, the city government has imposed new measures to limit the flow of visitors to the site. The goal is twofold: to mitigate the crush of tourists, which it fails to do, and to make money while they’re at it. First they have placed police barricades around the entire perimeter. Second, as of this week, non-Romans have to pay two Euros to descend to the actual water. Locals can still visit for free but must wait in a slow-moving line to reach the water. Once there they find that the police, with whistles blaring, offer them every encouragement to be on their way."

"Until a few years ago, you could show up and enter the Pantheon unimpeded any time you wished. Now you have to pay for your time slot—even though it is a functioning house of worship. As a result, enormous lines of visitors, waiting to enter, constantly occupy the Piazza della Rotonda, the square in front of the Pantheon. In the past, visitors could pleasantly sit under the great portico. When that became impossible—the portico is now roped off—they moved to the steps surrounding the nearby fountain. But now the municipal police, with whistles blaring, chase them away from there as well."

One other thing was interesting about all this. The article said of Trevi before the new rules: 

"those crowds never resulted in damage to the site, and there was a certain shambolic glory to the whole thing, which was free both in monetary terms and in the anarchic liberty of the experience. And the crowds naturally regulated themselves."

I wish the article had said more about how "the crowds naturally regulated themselves." But this reminded me of a chapter from the book I used as a supplemental text The Economics of Public Issues. It had a chapter called "The Economics of Exclusion."

It is about how private groups devise ingenious systems to conserve natural resources (maybe in the case of the fountain the resource is a pleasant experience). They are systems that do no not require any help from the government.

One example was surfing. Too many people might come to a beach to surf. But then no one can enjoy it. So local "surf gangs" came into existence to create and enforce rules. This regulated who could ride the best waves and where. It reduced collisions and enhanced the experience. Enforcement included verbal assaults and physical hostility.

Related posts about problems when thing are given away for free:
 
 
 

Florida counties give away vaccine for free and there are long lines (2020)

There's no such thing as free cheesecake (2019) 

 
 
 
 
Free Can Be Deadly. (give aways lead to stampedes)  (2010)
 

Taco Bell Gives Away "Free" Tacos, Problems Arise.  (2007)

More Free Give Aways Lead to Trouble. (A shopping mall in California gave away free gift certificates) (2006)

Saturday, February 07, 2026

Is There A Memory-Chip Shortage?

See The Global Memory-Chip Shortage Will Cost Us All: AI companies’ need for a type of once-affordable microchip threatens to drive up prices of all electronics—and limit data-center ambitions by Christopher Mims.

A shortage is when the quantity demanded is greater than the quantity supplied and the price is below equilibrium. But this looks like prices are going up because demand increased. New buyers are willing to pay the higher price and maybe the old buyers are not, so they get less. That might seem like a shortage to them but it is not shortage in this market. 

Excerpts:

"Behind the value of one of the world’s fastest-appreciating assets is the voracious appetite of AI companies. These same chips—mainly what’s known as RAM, but also the storage chips often called flash or solid-state memory—are required for almost every digital device on the planet."

"Prices for memory shot up 50% in the last quarter of 2025 and are projected to increase another 40% to 50% by the end of the first quarter of 2026"

"Because AI firms are crowding out other buyers of memory, unexpected consequences are likely to reverberate across countless industries. Effects could include delayed data centers, higher prices for laptops, TVs and other consumer electronics, and possible chip shortages for automakers that would delay vehicle production, in a potential repeat of the pandemic car crisis."

"Market leader SK Hynix said in late October that it had already sold out its entire inventory for all of 2026, but it announced massive investments in new manufacturing capacity, expected to be funded by the record revenues."

"Several months ago, Boise, Idaho-based Micron saw “a pretty significant surge in demand” from its data-center customers for 2026 and 2027"

"there has been a less sharp—but steady—increase in demand for all other applications, as device makers cram in ever more memory. Micron just announced it will stop producing its popular brand of PC memory to focus on supplying high-end memory for AI."

"In consumer electronics, margins are already razor-thin. Smaller manufacturers will likely have no choice but to raise prices, potentially denting demand. The situation has intensified so rapidly in the past two months that tech research firm IDC issued an update to its year-ahead forecast for smartphones and PCs because the anticipated price hikes are expected to reduce consumer demand. In the new worst-case scenario, smartphone sales in 2026 could dip 5%, and PC sales by nearly 9%, as a result of significantly higher prices for the gadgets." 

Related posts on supply and demand and shortages:

Is there a mechanic shortage? (2026)

Does Boeing face a shortage of a temperature-regulating part? (2024) 

Drug Shortages in America Reach a Record High (2024)

Is There A Booze Shortage? (2022)

Car makers face ‘chipageddon’ (2021)  

Does the U.S. have a firefighter shortage (2021) 

There is no truck driver shortage in the US (2021)

Is there a shortage of homes? (2020)

What Chocolate Shortage? Cocoa Prices Steady as Record Output Projected (2019)

Is there really a shortage of construction workers (2019) 

Was there really a shortage of meatless burgers? (2019)  

Is There A Christmas Tree Shortage? (2017)  

Is There Really A Honey Bee Shortage? (2013)

Will There Be A Pumpkin Shortage This Year? (2011)

Thursday, February 05, 2026

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."