A Very Important Employment Trend Change

Click to enlarge.

The noninstitutional population of those aged 16 to 24 divided by the noninstitutional population of those aged 25 to 54 is shown in blue.

The employment level of those aged 16 to 24 divided by the employment level of those aged 25 to 54 is shown in black.

If you look closely, you can see that there is a divergence between the two series starting in 2000. They no longer generally move in the same direction.

The following scatter chart shows the old trend compared to the new trend. I'm using 7 year moving averages to really smooth the data out (which helps eliminate the noise and the temporary effects of short-term cyclical recessions and short-term cyclical expansions). This allows us to more easily spot any structural problems that might remain.


Click to enlarge.

As seen in the chart, there's a new trend in blue and it's looking mighty ugly. I think it really is safe to say that it is different this time.

Pardon my language, but it really sucks to be 16 to 24 years old right now. It would seem that those aged 25 to 54 are not all that willing to give up their jobs in this difficult economic environment. This behavior change did not start in the aftermath of the housing bubble. It actually started at the very height of the dotcom bubble.

Let me be very clear here on what the chart has been saying since April of 2000. The more 16- to 24-year-olds appear compared to their 25- to 54-year-old counterparts, the fewer jobs they get relative to their counterparts. This is a decidedly horrible trend, especially if we someday expect the younger generation to "rescue" the older generation's economy again. You know, by being first-time home buyers filled with irrational exuberance and what not. Sigh.

Source Data:
St. Louis Fed: Custom Chart