Another interesting (albeit flawed) view of the “recovery”

This graphic (courtesy of the Economic Policy Institute) shows the employment/population ratio since just before the Great Recession started. Interestingly, although the official U2 unemployment rate has fallen to 6.7% from a peak of 10% in late 2009, the E/P ratio has barely budged since the end of the recession, indicating we have a long way to go before we reach pre-recession levels of “employment saturation”. This indicates that much of the fall in U2 has been due to people exiting the labor force, not actual employment gains. However, even the arguably more reliable E/P ratio is misleading; after all, the baby boomers have begun to retire, naturally putting downward pressure on the ratio. It seems that no matter which measure we choose it is hard to find one that accurately reflects the state of the labor market.


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