Is the US Economy at Full Employment?
Jill Schlesinger
CBS News Business Analyst, host "Jill on Money/MoneyWatch" pods, author of "The Great Money Reset"
It may not feel like it, but the US economy is at full employment. The Labor Department reported that the economy created 178,000 jobs in November, just under the 2016 average monthly creation of 180,000 and the unemployment fell to a nine-year low (August 2007) of 4.6 percent.
According to the Federal Reserve, there is no magic unemployment rate that defines “full employment,” because that notion is largely determined by uncertain and “nonmonetary factors that affect the structure and dynamics of the job market,” which “may change over time and may not be directly measurable.” Still, in the Fed’s September 2016 Summary of Economic Projections, participants’ estimates of the longer-run normal rate of unemployment ranged from 4.5 to 5.0 percent and had a median value of 4.8 percent.
The 4.6 percent November print might make you think that we are indeed at full employment, but why the rate fell is also important. The slide occurred not just because of new workers finding jobs, there were also 226,000 people dropping out of the labor force. That amount surprised economists, who mostly told me, “let’s see what the coming months bring, before we come up with a reason behind the change.”
Meanwhile, the broader measure of unemployment (U-6), which includes part-timers who can’t find full-time work and discouraged jobseekers, who have given up looking for work, fell to 9.3 percent, a rate not seen since April 2008. The broad rate averaged 8.3 percent in the two years before the recession.
Besides the surprising decrease in the labor force, the other disappointment in November was the tenth of a percent slide in average hourly earnings, after a sharp rise in the prior month. Still, earnings were up at a 2.5 percent annual rate (compared with 2.8 percent in October), a decent clip with inflation remaining low.
This was the last important piece of data before the Fed’s last policy meeting of the year. While it was not sterling, it was certainly good enough to justify increasing rates by a quarter of a percent. Whether or not the central bankers will explicitly change their notion of full employment remains to be seen.
Retired Marketing and Business Development professional
7 年The unemployment rate depends on anybody's definition of the size of the workforce. The more telling labor participation rate that shows how many working folks are supporting the rest of the population, has been on a steady decline for a decade. Just due to a graying population or are there other factors driving it down?
Operation Manager at PHILIPSON GLOBAL RESOURCES LIMITE
7 年Join My Team on both The Billion Coin and Bitcoin and make millions of Naira, Thousands of Dollars/Euro before the year ends...MMM has suspended any payment till January, Crypto-currencies do not get freeze or suspended...Use your BITCOIN to invest with ZARFUND with 0.03. But if you don’t have BITCOIN account you can create a wallet with BLOCKCHAIN.INFO That blockchain its like open account which you will have to fund it with any BITCOIN and, let say you have 0.10 BTC all you need to do is use 0.03 to upgrade to stage 1 in ZARFUND/BITCOIN. For Registration follow this link goo.gl/KzPUIg Let’s chat on whatsapp 08035713580... For further explanation
Import Buyer, International Transportation and Supply Chain
7 年NO!
Copywriter / Content Writer / Creative Director / Marketing Communications Strategist
7 年Nonsense. Numbers can be made to dance to any tune. Real unemployment is much higher. Reminds me of what Groucho Marx said when his wife caught him cheating: Who are you gonna trust, me or your eyes?