Today’s labor numbers are in, and for the first time in a few years, the unemployment rate is below 8 percent. President Obama is celebrating this on the campaign trail.
Unemployment doesn’t tell the whole story.
When people leave the labor force, does that make the picture look prettier when the unemployment rate shrinks? You bet.
That is what has been happening*. Unemployment tells part of the picture, but it is not as good of a measure of economic health when compared to the EMRatio (Civilian Employment – Population Ratio).
As I wrote in a previous post — many economists believe that EMRatio is the the broadest statistical measure of unemployment because it, simply, is the ratio of employed citizens to that of the population. In short, it gives a much clearer picture.
According to EMRatio, we’re in roughly the same shape as October of 2009.
Is that a reason to celebrate?
*UPDATE: See comments for good insight from a former professor of mine.