Is the Fed’s Lifeline Actually Toxic for the Global Economy?
Even dressed up for the optimist, incoming information about the U.S. economic recovery sometimes seems dubious. The latest Employment Situation report, for example, shows that headline unemployment declined 0.2 percentage points on the month to 7.4 percent in July, its lowest level since President Barack Obama took office at the beginning of 2009. Payrolls increased by a modest but healthy 162,000, and the total number of unemployed people edged down slightly to 11.5 million.
At a glance, this data is positive. A healthy labor market is a critical cornerstone of any economy and with unemployment as high as 10 percent in 2009, putting Americans back to work has been a top priority among policymakers. But the data is also misleading — or, at best, incomplete.
The headline unemployment rate doesn’t include doesn’t include marginally attached or discouraged workers — those who are underemployed and those who have given up on searching for a job — and is sensitive to changes in the labor force participation rate, or the share of adults who are willing and able to work.