US Unemployment

“We expect unemployment rate will hit 6.5% in second half of 2014 and 6% in mid-2015. We nonetheless continue to expect first fed funds rate hike for early 2016 due to broader labor market slack, low inflation and “optimal control” considerations. Our forecast has been for a decline in the unemployment rate to 6% at the end of 2015. The unemployment rate, however, dropped again in November and at 7% is now down nine tenths since the start of the year. We update our framework for projecting the unemployment rate, which combines assumptions for employment, labor force participation and population growth into an unemployment forecast. Our calculations suggest that the unemployment rate will continue to decline at its 2013 pace in 2014 as the unemployment benefits expire and the economy accelerates, but then decline more slowly thereafter.” (Goldman Sachs)

The employment to population ratio remains depressed, the civilian labor force has actually contracted in the past year, and the new job adds are not coming in high-quality industries. The employment to population ratio. There are 1,148,000 fewer Americans working today than there was in November 2006. Meanwhile, the population has grown by more than 16 million people since then. The long-term average of 65.8 percent, at that rate the official unemployment rate in the United States would be 11.5 percent instead of 7 percent. In 2007, there were 121.9 million full-time workers in the United States. Today, there are only 116.9 million full-time workers in the United States.

Employment-Population-Ratio-2013

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