Key Points:
Fifty-Year Low: Labor force participation fell to 61.5% in June, the weakest reading since June 1976 outside of the Covid shutdown, with 105.8 million Americans now sitting outside the workforce entirely.
Hike Scenario: If core inflation stays above 3.5% while household employment keeps falling, futures markets are pricing a 41.8% probability the Fed raises rates at the next meeting rather than cuts them.
Special Report: The energy story near the Grand Canyon (from Behind The Market)
Curve Steepens: Long-dated Treasury yields climbed Friday while short-end yields held, widening the spread as bond traders positioned for stagflation even as the Dow closed at a record 53,056.
A friend called me Friday morning. He had just seen the jobs number. Unemployment fell to 4.2%, down from 4.3%. He said the economy must be fine.
I told him to look again.
The unemployment rate fell for the worst reason it can fall. It fell because people stopped looking for work. Not a few people. Not a thousand. Seven hundred and twenty thousand of them. In one month.
I can't stop thinking about this. When people quit the job hunt, the government stops counting them as unemployed. So the rate goes down. But nothing got better. Something got worse.
Elon Musk: "Do you Like Minting Money?"
Elon Musk called lithium refining a “license to print money.”
He is right. Here is why.
Global lithium demand is set to grow 5X by 2040. Every EV battery needs up to 60 kilograms of it. AI data centers runs on it. And the old supply chain cannot keep up.
That is why General Motors led a $50 million round into a private company called EnergyX.
What GM saw was simple. The old way of mining lithium takes 18 months and leaves most of the metal in the dirt. EnergyX built a patented system that pulls out 3X more, and it does it in days.
That’s why GM wrote the check.
And now you can invest alongside with them, until July 16.
The labor force participation rate dropped to 61.5%. That is the lowest it has been since June 1976. I had to look it up twice. Nineteen seventy-six. Gerald Ford was in the White House. Gas lines were a recent memory. Not counting the Covid shutdown, we have not seen a number this low in almost fifty years.
I don't think most people realize what happened last week. The headline said things are fine. The numbers underneath said people are giving up.
Payrolls came in at 57,000 new jobs. Wall Street expected 115,000. So we got about half of what economists were bracing for. Then they revised April and May down by 74,000 jobs combined. Jobs they said existed a month ago. Turns out they did not.
The household survey was worse. It showed employment fell by 507,000. That is half a million Americans who had a job in May and did not have one in June.
There are now 105.8 million Americans not in the labor force. That is 2.5 million more than a year ago. A city the size of Chicago walked away from work in twelve months. And the market said hooray.
I get it. The headlines are built to be scanned in ten seconds. Dow at 53,056. S&P at 7,537. Both at record highs. Unemployment at 4.2%. Nothing to see here.
But look one layer down. Long-term unemployed is up 286,000 over the past year. Recent college graduates cannot find work. Their unemployment rate is 4.8%. For all college grads it is 2.7%. So the kids just out of school are almost twice as likely to be jobless as the older workers.
This affects our money in ways that are not obvious yet. When the labor force shrinks, the tax base shrinks with it. Fewer workers paying into Social Security. Fewer workers paying into Medicare. More people drawing from both. The math does not hold for long.
The Key to This $560B Market Is in Your Bloodstream
Every year, $560B is spent on osteoarthritis. But not a single therapy has been able to actually stop it. It turns out the answer has been inside us all along.
A startup named Cytonics discovered the human body already produces a protein designed to protect cartilage. It just doesn’t produce enough where it's needed most. So Cytonics harnessed it.
Their first-generation therapy has already treated 10,000+ patients. Now they've engineered a 200% more potent, mass-producible version pushing toward FDA approval.
If approved, it could be the first therapy to actually halt cartilage destruction and promote regrowth in a market that has never had a real solution. Invest in Cytonics before the opportunity ends later this month.
Here's what worries me most. The Fed is now cornered. Inflation is still above 3.5%. So Chair Warsh cannot cut rates to help the job market without letting prices run hotter. But the job market is bleeding. And the bond market has noticed.
Traders are now pricing a 41.8% chance the Fed raises rates at the next meeting. A hike. Not a cut. Into a weakening labor market. Because prices refuse to come down.
The Treasury curve steepened on Friday. Short-term yields held firm. Long-term yields climbed. That is the bond market saying two things at once. It is saying the Fed cannot cut. And it is saying the debt keeps piling up.
I have covered markets for a long time. I have not seen a setup quite like this. Rates too high for the job market. Prices too high to lower rates. And stocks at record highs anyway, priced for a soft landing that the jobs data does not support.
Nobody knows how this ends. I don't. The Fed doesn't. But I keep coming back to that one number.
Sixty one point five percent.
The lowest since Gerald Ford was president. Not because we had a lockdown. Not because a war shut down the economy. Just because Americans, quietly, one by one, are walking away from work. And nobody at the White House podium wants to say it out loud.
I keep picturing the ticker at the top of the screen on Friday. Green everywhere. Dow record. S&P record. Unemployment down. And underneath it, 720,000 people who stopped looking. They do not show up in the ticker. They do not show up in the index. But they are there. And there are more of them every month.
More on this tomorrow.
— Lauren
Editor, American Ledger
