Along Calculated risk of March 7, 2021 09:13:00 AM
The headline unemployment rate of 6.2% underestimates the current situation significantly.
Next, we calculated the unemployment rate, including the number of people who left their jobs after early 2020 and the expected labor force growth.
|Be expected |
As the economy recovers Many of those who have left the workforce will probably come back, And there may be more entrants to the workforce (although Recent demographic data is disastrous).
Federal Reserve Board Chair Powell had a similar discussion last month: Return to strong labor market Excerpt:
Employment in January this year was about 10 million below February 2020 levels, significantly short of the aftermath of the worst Great Depression.
After rising to 14.8% in April last year, the announced unemployment rate fell relatively rapidly, reaching 6.3% in January. However, the unemployment rate published during COVID dramatically underestimates the deterioration of the labor market. Most importantly, the pandemic has seen the largest reduction in labor force participation in 12 months since at least 1948. Fear of the virus and loss of employment opportunities in the most affected sectors of the virus, such as restaurants, hotels and entertainment venues. , Many have withdrawn from the workforce. At the same time, virtual school education has forced many parents to leave the workforce to provide all-day care to their children. Overall, nearly 5 million people say the pandemic made it impossible to find a job in January. In addition, the Bureau of Labor Statistics reports that many unemployed people are misclassified as being employed.Correcting this misclassification and counting people who have lost their workforce since February last year as unemployed will help. January unemployment rate close to 10%..
This graph from the Federal Reserve Board shows the actual unemployment rate and some alternative estimates (mainly due to people leaving the workforce).
Just looking at the unemployment rate in the headline to assess the current situation is a mistake.
The following graph (which I post monthly) shows the rate of employment decline since the onset of each recession since World War II.
The current employment recession was by far the worst in percentage since World War II.
In the worst of the Great Depression, employment fell 6.29% from its previous peak.
Currently, employment is down 6.21%. The current unemployment situation is about the same as the worst Great Depression (there was no pandemic in 2009).
Employment situation is much worse than unemployment rate shows
http://feedproxy.google.com/~r/CalculatedRisk/~3/AQV6zzQdoxI/the-employment-situation-is-far-worse.html Employment situation is much worse than unemployment rate shows