Even though the headline jobs report missed, there were enclaves of strength. As you can see in the bottom chart, the labor force participation rate among men aged 25-54 increased to 89% on a seasonally adjusted basis. This is about a 1% improvement from the bottom which was hit in 2013, 2014, and 2015.

The metric is a still over 3% below the peak in 1999, but this is a step in the correct direction. The chart on top shows the total labor force participation rate of people 25-54 on a seasonally adjusted basis. As you can see, it was pushed higher by the improvement from men. It is now at 79.1% which is about 3% off the peak in the late 1990s. This improvement being driven by men is unusual for this cycle since much of the improvement has come from women. Their participation rate for the same age of people is at 75%. It has improved about 2% from the bottom of this cycle. It is about 2% lower than the peak in the early 2000s.

Leveraged Loan AUM Declines

This expansion period can be categorized as one in which loans have been given out whenever anyone needs money to whoever is asking for it, no questions asked. Cov-lite loans have dominated lending (they became 81% of the defaulted loan market in 2017) because that extra yield is worth not knowing much about the business lenders are giving money to. After financial conditions started to improve in 2016, leveraged loans became hugely popular. As you can see in the chart below, its popularity has waned in the second half of 2017. There was a decline in leveraged loan fund assets under management for the first time since June 2016. The leverage loan market declined because of cash withdrawals and a weak secondary market. The total assets under management fell $790 million to $156 billion. The growth started slowing in 2017 because the increase in retail inflows dried up and because the Fed looks like it will be raising rates quicker. I wouldn’t get that worried about this decline because the Chicago Fed Financial Conditions index is still just one basis point off the low of the cycle.