Recent Posts

Tuesday, October 22, 2013

U.S. Employment Trends Steady Before The Shutdown

Chart of U.S. Employment Ratio and Unemployment Rate; remain on trends.

The delayed U.S. Employment Situation Report for September (pre-government shutdown) was decent, in my opinion. The market apparently does not agree with this sentiment, as the 10-year Treasury yield is down about 7 basis points at the time of writing.

The Employment Ratio and Unemployment Rate remain on their straight-line trends. The fall in the Unemployment Rate was somewhat more legitimate this month, as the participation rate was unchanged. It will take at least a couple of months to see what lasting impact the government shutdown has had on the labour market.

With the Unemployment Rate at 7.2%, the "threshold" level of 7% is now extremely close. The Fed is now facing a nasty communications problem - is the unemployment rate still useful, or has it become broken due people dropping out of the labour force? I personally think the essentially unchanged Employment Ratio gives a much better view of the labour market, but I recognise that many policymakers are nervous about this extended period of a negative real policy rate. Memories are still fresh about the perceived policy errors made in the 1970's.

(c) Brian Romanchuk 2013

No comments:

Post a Comment

Note: Posts may be moderated, and there may be a considerable delay before they appear.

Although I welcome people who disagree with me, please be civil.

Please note that my spam comment filter appears to dislike long "anonymous" posts. I get no warning about this, and only go through my "spambox" infrequently. The best bet it to keep comments short, and if you think the spam filter struck, let me know with a short comment.