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The Economy's Tough Grind Forward

NEW YORK (TheStreet) -- The U.S. household labor data show an economy that has morphed dramatically in the past decade. Therefore interpreting the headline monthly labor data is not a simple matter. Jobs are being added but the labor force is shrinking.

People are retiring -- partly due to lack of opportunities. With one person's retirement, a younger person in the work force gets a chance to advance his or her career. These different economic dynamics alternate between positive, negative, positive, negative, positive and so forth. But with the quick drop in unemployment down to 7%, are we at last just a few months away from declaring this recovery complete?

In this analysis we step beneath the headline numbers and show the general direction of things, particularly how the ongoing drop in the labor force is very much distorting our impression of the headline numbers.

The volatility in the month-to-month data, including massive revisions, reclassifications and distortions from other effects such as from a temporary government shutdown, all add complexity to interpreting the data. And in the past decade we also have data that incorporates the economic turmoil from the financial crisis.