On Friday Dec. 7, The Bureau of Labor Statistics (BLS) released its November unemployment numbers and the unemployment rate declined from 7.9 percent to 7.7 percent. Most people would assume this is good news indicating that our economy is heading in the right direction and creating jobs at a rate that will quickly reduce the number of people who are unemployed.
Unfortunately, neither assumption is correct. Our economic decline is continuing with a greater percentage of people dependent on government and a lower percentage of people with jobs.
Given the current state of the jobs market and the number of people leaving the labor force, the official unemployment rate taken alone has become a very poor indicator of economic growth. The key to determining whether our economy is growing is to take a look at the underlying numbers. In particular, two metrics that the BLS calls the “labor force participation rate” and people “not in the labor force” that “want a job now” have become increasingly meaningful economic indicators.