Wednesday, July 9, 2014

Unemployment rate low but labour participation is equally low

Recently the United States have announced a lower than expected unemployment rate. However, they have left one thing unsaid, the labour participation rate. The current labour participation rate as of June 2014 is a low of 62.8%, the lowest on record for the past 10 years.

What does that mean? It just means that there are a whole lot of people who are either of retirement age which I seriously doubt, or they are not included in the unemployment rate because they have stopped looking for work.

The labour participation rate before the recession was 66%. That means that the US unemployment rate is not much better than the period immediately after the Great Recession. Whatever figures that we're looking at right now, is an improvement from previous unemployment rates, but the improvement is only slight. The United States is still trudging along slowly and I don't expect it to have a big improvement soon.

Don't put too much hope into the economy recovering very soon.

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