I do no envy anyone who has to make the call that this economy is official recovered. but a little over a year ago the federal reserve announced plans to enact some extraordinary measures that would remain largely in place until either a falling unemployment rate hit 6.5% or a rising inflation rate hit 2.5%.
As of Today, Unemployment fell to 6.7%.
I continue to be miffed by just how all over the place predictions on how this recovery is supposed to take place. I'm just as miffed by the fact that it is 2014, over 6 years when the economy started to topple in the twilight of 2007 and we are still referring to this economy as an economy in recovery. Today the Bureau of Labor Statistics gave us the kind of jobs report that reminds us just how out of whack everything can become so quickly.
Most of the predictions for the December jobs report expected another ho hum, move things at a snails pace back towards the total number of jobs that we had before the great recession began, but that's not what headlines this morning are reading.The headline number is bad, really bad. The BLS says the economy added 74,000 jobs in December, which would be the worst result in a good, long time. Last time numbers this bad came out, you where probably listening to 'Like a G6' on your iPhone 4.
And yet the household survey showed a very large drop in unemployment, all the way down to 6.7%, the lowest we have seen since we thought Tobey Maguire was a shoe-in for 'Spider-Man 4'.
One way for unemployment to drop even as job growth stalls is for huge numbers of people to drop out of the labor force. And we have seen labor force departures all year and that continued their downhill slaloming this month. The lowest rates since Lou Ferrigno appeared on television doused in Green Paint. The participation rate did actually jump a bit in November, but still appears to be on a downward trend. Divergences between the two surveys just sometimes happen and you usually need to wait a month or two for the revisions to straighten things out.
Long story short, we are getting very close to the Federal Reserve’s 6.5%unemployment
threshold, and despite that the overall labor market looks weak. That means the distinction
some Fed officials have drawn between a automated 'trigger' to start tightening money as soon as we
reach 6.5% unemployment rate and a 'threshold', meaning nothing is automatic, is about to become very
relevant discussion. Because, if you add on the difference in the participation rate from now to pre-recession numbers (66% to 62.8%) to the unemployment rate, using the number of 9.9% may be a better indicator of the health of the jobs market in this economy. The threshold approach is a much better one for people with a lot vested in low interest rates, but at her impending first meeting and press conference Janet Yellen may find she needs to clarify exactly what the term 'threshold' means faster than she was hoping.
And yet the household survey showed a very large drop in unemployment, all the way down to 6.7%, the lowest we have seen since we thought Tobey Maguire was a shoe-in for 'Spider-Man 4'.
One way for unemployment to drop even as job growth stalls is for huge numbers of people to drop out of the labor force. And we have seen labor force departures all year and that continued their downhill slaloming this month. The lowest rates since Lou Ferrigno appeared on television doused in Green Paint. The participation rate did actually jump a bit in November, but still appears to be on a downward trend. Divergences between the two surveys just sometimes happen and you usually need to wait a month or two for the revisions to straighten things out.
Long story short, we are getting very close to the Federal Reserve’s 6.5%unemployment
threshold, and despite that the overall labor market looks weak. That means the distinction
some Fed officials have drawn between a automated 'trigger' to start tightening money as soon as we
reach 6.5% unemployment rate and a 'threshold', meaning nothing is automatic, is about to become very
relevant discussion. Because, if you add on the difference in the participation rate from now to pre-recession numbers (66% to 62.8%) to the unemployment rate, using the number of 9.9% may be a better indicator of the health of the jobs market in this economy. The threshold approach is a much better one for people with a lot vested in low interest rates, but at her impending first meeting and press conference Janet Yellen may find she needs to clarify exactly what the term 'threshold' means faster than she was hoping.
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