Although the official unemployment rate dropped to 6.6 percent in January 2014, some critics have noted the sluggish pace at which the economy is adding jobs. However, this article notes a significant 0.4 percent drop in the under-employment rate in January, which economists note as an encouraging factor in economic recovery.
The under-employment rate, also known as the "U-6" broader unemployment rate, dropped to 12.7 percent - the lowest rate in the past five years. And although the labor force participation rate is low at 63 percent, it has been moving upward. Looking at all of these factors, economists say that some workers may be leaving the workforce unwillingly or giving up on the job search, but that there are signs that people who have been under-employed are now employed full-time, people not actively seeking but wanting work are finding jobs, and that new jobs are being created.
This article points to positive trends which bode well for the economy in the short run. However, I fear that recent seasonal surges in employment within the housing construction market and manufacturing (a sector that many fear will slow down severely) may be giving an overly-optimistic forecast. Even if those two sectors have added jobs, the housing market has been recovering more slowly than anticipated, and the manufacturing sector may begin to decline even further than it already has, so in the long run, those jobs may be lost all over again. In the short run, though, I hope that the recent decline in unemployment and under-employment boosts consumer confidence and overall economic performance.
http://blogs.wsj.com/economics/2014/02/07/unemployment-rate-telling-a-much-more-hopeful-story/
The under-employment rate, also known as the "U-6" broader unemployment rate, dropped to 12.7 percent - the lowest rate in the past five years. And although the labor force participation rate is low at 63 percent, it has been moving upward. Looking at all of these factors, economists say that some workers may be leaving the workforce unwillingly or giving up on the job search, but that there are signs that people who have been under-employed are now employed full-time, people not actively seeking but wanting work are finding jobs, and that new jobs are being created.
This article points to positive trends which bode well for the economy in the short run. However, I fear that recent seasonal surges in employment within the housing construction market and manufacturing (a sector that many fear will slow down severely) may be giving an overly-optimistic forecast. Even if those two sectors have added jobs, the housing market has been recovering more slowly than anticipated, and the manufacturing sector may begin to decline even further than it already has, so in the long run, those jobs may be lost all over again. In the short run, though, I hope that the recent decline in unemployment and under-employment boosts consumer confidence and overall economic performance.
http://blogs.wsj.com/economics/2014/02/07/unemployment-rate-telling-a-much-more-hopeful-story/
4 comments:
This is an interesting article as many of us are seniors and soon to be in the work force. It's good that they hope for positive things as we are coming closer to the end of the year. Unemployment is always an interesting thing to follow. Hopefully, like you said, it does boost consumer confidence and economic performance.
It is important to compare different surveys of employment and not rely on the results of the unemployment rate on its own to gauge the situation of our economy’s labor force and employment. Both the payroll (establishment) and household surveys are needed for a complete picture of the labor market. The article brings up the “U-6”, saying the U-6 dropped 0.4 percentage points. This statistic is also a very important factor in the labor force. Dropping the rate of discouraged workers and “marginally attached workers” tells more about our economy than overall unemployment results because it shows how well our labor market is meeting the wants and needs of our labor force.
It's interesting to see the U-6 unemployment rate because I feel like most reports never really talk about that, but only the 6.6 percent unemployment rate. This makes employment and the economy look a lot stronger than it actually is. It's interesting to think that the under-employment rate is much higher as well. I think that when talking about the economy, people should consider both those statistics and their meanings.
Unemployment rate sure does affect consumer confidence and economic activity, because it tells us how the firms are doing in business. If firms are doing well, they will expand and create more jobs which will drop the unemployment rate. If unemployment rate is high, consumers are discouraged to spend as they know that the economy is bad.
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