Is the Labor Market Actually Improving?

Okay-- so the U.S. economy added 288,000 jobs in June and the unemployment rate drops to 6.1%. Good sign? Bad sign? Here is my take.

There continues to be a huge amount of confusion out there. The official unemployment rate has been going down for a while now, but this is really nothing but people exiting the labor force. In fact, if we calculate the unemlpoyment rate using the June 2009 labor force participation rate, we will find that unemployment continues to be persistently high (somewhere around 10 percent) despite the fact that employers were posting substantially more vacancies over the same period.

My favorite measure of the labor market is the employment-population ratio, because it isn’t subject to questions about whether people not in the labor force are really just as unemployed as those in the measured labor force without jobs. (If we look at emp-pop ratio for prime age workers only; we will see the same pattern).

Well, I'll let you comment. But, whatever your take, this is an economy crying out for more stimulus, wherever you can get it. the basic story remains the same as it has been for 4 1/2 years: an economy that’s growing, but not enough to feel anything like a real recovery. The employment to population ratio is pretty flat. There's still a HUGE way to go up.