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Economy
In reply to the discussion: Weekend Economists Sit on a Wall August 23-25, 2013 [View all]Demeter
(85,373 posts)51. This graph calls the entire economic recovery into question By Ezra Klein
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/08/01/this-graph-calls-the-entire-economic-recovery-into-question/?wprss=rss_ezra-klein&clsrd
The core issue here is that the unemployment rate only counts people actively looking for work. That means there are two ways to leave the ranks of the unemployed. One way the good way is to get a job. The other way is to stop looking for work, either because youve retired, or become discouraged, or begun working off the books.
The yellow line on the left shows the official unemployment rate since 2008. Its fallen from over 10 percent to under 8 percent. But the red line on the right shows the actual employment rate that is, the percentage of working-age adults with jobs. What should scare you is that the red line has barely budged.
At the beginning of 2007, the employment rate was 63.3 percent, and the unemployment rate was 4.7 percent. By the end of 2009 so, after the worst of the recession it had fallen to 58.3 percent, and unemployment was up to 9.9 percent. Today, its 58.7 percent, even though unemployment has fallen to 7.6 percent. That means a lot of the people whove left the rolls of the unemployed havent gotten a new job. Theyve just left the labor force altogether.
Some of thats natural. The population is aging, and the labor force was expected to shrink. But it wasnt expected to shrink this much. The economy is a lot worse than a glance at the unemployment rate suggests. And instead of doing anything to help those people get back to work, Washington canceled the payroll tax cut, permitted sequestration to go into effect, and is now arguing about whether to shut down the federal government and possibly breach the debt ceiling in the fall.
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