The shrinking labor force is why we have been enjoying a “deceptively modest unemployment rate.” In a post-bubble environment, job creation is an ongoing structural problem. Thus, these changes cannot be blamed on President Bush - at least not entirely. We questioned whether the Tax Cuts were over-emphasizing the stock market, to the detriment of the broader economy, over a year ago.
That turned out to be fairly prescient: We now see strong corporate profitability combining with anemic job creation to create a range-bound, exigent stock market.
Forget about the Presidential elections for a moment, and consider this: Without organic job creation, any economic recovery is doomed to failure sooner rather than later.
Read the Big Picture, if you are not already.