The Recovery - Round 1

The government reported on March 4^th, 2011, that the economy created 192,000 new jobs in February.  As a result the official unemployment rate dropped below the 9% mark. This is improved news for all of us.   However, the statistics are still a little shy of the whole truth.  The US Bureau of Statistics also publishes a thing called the “Labor Participation Rate” each month as well.  The labor force is defined as all people 16 years and older who are employed, or are actively seeking employment.  It does not include students, retirees, those with unreported income, or those who have given up trying to find jobs.  From this data the BLS calculates a participation rate.  This compares all who are working with all those who really are in the labor participation pool.  That rate is currently 64.2% percent when seasonally adjusted, and 63.9 % when not.  This was the same level as it was in January. Both of those percentages are currently running at 27-year lows, meaning the percentage of Americans not working or even trying to join the work force is at a near three-decade high. The last time the participation rate was above 66 percent — the 10-year average — was in August 2008. If we only look at the unemployment rate without considering the shrinkage that has taken place in the workforce we will continue to delude ourselves about the strength of the recovery.  And don’t forget,  in June we will have a whole new crop of potential workers graduating and entering the pool of available workers looking for jobs.