The Labor Department said Friday that the U.S. unemployment rate is at 4.7 percent, but does that tell the whole story?
Since Trump first took credit for the lower unemployment rates earlier this month, journalists and economists have noted that he isn’t really the cause of the decline. Unemployment among black Americans has been declining pretty steadily after coming close to 17 percent in 2011.
Potential perils are in plain sight: An intense and unpredictable tariff battle is alarming businesses across the country. The annual federal deficit is heading toward $1 trillion. Credit card debt is soaring. And the synchronous wave that lifted every world economy at the year’s start has dissipated. So what? Such risks have done little to puncture the exuberant optimism that is encouraging American businesses to ramp up hiring and consider new investment.
The labor market the United States is experiencing right now wasn’t supposed to be possible. Not
that long ago, the overwhelming consensus among economists would have
been that you couldn’t have a 3.6 percent unemployment rate without also
seeing the rate of job creation slowing (where are new workers going to
come from with so few out of work, after all?) and having an inflation
surge (a worker shortage should mean employers bidding up wages,
Federal Reserve officials believed that the labor market was about as good as it could get. They were wrong. It seems like there are many people on the sideline that are trickling back into the job force and who are not counted as unemployed since they have been out of the job market for over 6 months or more. Furthermore, the wages have remained stagnant which also signals a weaker economy than projected.