The fact is that the U.S. economy was more productive from a Labor Force Participation Rate perspective during the Financial Crisis as compared to where it stands today.
The Labor Force Participation Rate stood at 66.0% in October 2008 and steadily declined until January 2020 when the Labor Force Participation Rate stood at 63.4%. The rate declined to 60.2% in April 2020 (the COVID trough), increased to 61.7% in August 2020 and stands at 61.6% as of the most recent publication for the month of June 2021. Despite all of the rhetoric around a booming economy, I see a boom in the money supply, in prices of goods and services, in government and corporate debt but not in labor productivity. This decline in the Labor Force Participation Rate will continue for the next 100 years in my view as unskilled labor is increasingly displaced from the workforce due to advances in automation. This will lead to expanded entitlement programs (similar to what we have experienced during the 2020-2021 period), more money printing and debt.