Townhall: Where is Unemployment Headed?

[Patricia M. McBride]

This article has a great deal of very good information about the demographics of our unemployment situation and many graphs to give you an accurate picture of unemployment.  Well worth a look see.

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I have a pretty cool interactive map below that will let you graph the unemployment rates based on parameters that you can choose.
First let's take a look at the current unemployment rate and a discussion of the parameters that define it.
The BLS says the unemployment rate is 8.3%. There is much recent debate over that number, and many do not believe it. Regardless, this is where we stand as of Friday March 9, as reported in my post Nonfarm Payroll +227,000 ; Unemployment Rate Steady 8.3%; BLS vs. Gallup.

Quick Notes About the Unemployment Rate

• In the last year, the civilian population rose by 3,584,000. Yet the labor force only rose by 1,569,000. Those not in the labor force rose by 2,014,000.
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• In February, the Civilian Labor Force rose by 476,000.
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• In February, those "Not in Labor Force" decreased by 310,000. If you are not in the labor force, you are not counted as unemployed.
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• Participation Rate rose .2 to 63.9%
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• Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.

Over the past several years people have dropped out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low. Some of this was due to major revisions last month on account of the 2010 census finally factored in. However, most of it is simply economic weakness.

The key is not how we got here, but rather where the unemployment rate is headed next.
Unemployment Rate Factors
Whether the unemployment rate rises or drops is a function of two factors

1. How many jobs are created or lost
2. How fast the labor force is rising or contracting

Bernanke estimates it takes about 125,000 jobs a month to keep up with population growth. Demographically speaking, I agree with that number but it should decline over the next few years as boomers retire.
The math is straight forward, all things being equal (they aren't) the labor force should rise by about 1.5 million jobs per year.

Read more here:  http://finance.townhall.com/columnists/mikeshedlock/2012/03/24/wher...