Saturday, November 04, 2006

The unemployment rate falls a five year low!

The fall in the unemployment rate announce yesterday looks like good news. The Employment Situation Summary for October showed an unexpected drop in the U.S. unemployment rate to 4.4% which is the lowest rate since May 2001 at the beginning of the last recession. President Bush on the campaign trial lost time in spreading the good word.

MacroMinds know that the unemployment rate is not the only gauge of the health of the labor market. Recall from Chapter 6 of your text that the unemployment rate doesn’t tell us anything about the quality of jobs that are being created. Part-time and contingent workers are considered employed even if they want full-time work. People employed at jobs below their capability are considered employed. Finally discouraged workers are not considered unemployed. With all these caveats in mind it’s nice to see the continuing fall in the jobless rate. We can safely say that there is little cyclical unemployment and the present time, and that the unemployment rate is near its target rate.

Extra Credit: What are “discouraged workers” and why are discouraged workers important for interpreting the unemployment rate? If you are the first student to send me an e-mail ( with the answer, you will be rewarded with two extra credit Discussion Board points. Only two points extra credit per student can be earned in any given week from the blog questions.

No comments: