Unemployment and Labour Force Participation in the US – Reliable Statistics?

The unemployment rate in the United States is currently 4.4 percent and is atĀ a ten-year low. Naturally, the Trump administration has been trying to interpret low unemployment numbers as a sign of their successful job-creating policy. This stands in strong contrast to comments that Trump made during his election campaign, alleging that the “real unemployment rate” was as high as 42 percent. But pre-inauguration Trump is not the only one who is concerned that the official unemployment rate does not fully capture the gap between the US economy’s current state and its full potential, often refered to as “slack”. Despite low unemployment numbers and a still very low interest rate, inflation has been timid, giving rise to theories that the slack in the US economy is higher than the unemployment rate might suggest. I take a brief look at falling labour force participation rates and underemployment to investigateĀ the amount of truth in these theories and discuss implications and some potential remedies. Continue reading “Unemployment and Labour Force Participation in the US – Reliable Statistics?”