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JP Morgan - The Labor Force Participation Puzzle

Posted by Michael J. O'Connor | CWS®, Vice President Investments
May 17, 2013


"Slow growth and mediocre job creation have been common themes used to describe the U.S. economy in recent years, as both the labor market and broader economy failed to produce the snap-back rebound many expected following the deep recession seen in 2008 & 2009. Despite that lackluster growth, the unemployment rate has now fallen to 7 5% after peaking at 10% in October of 2009 a much faster decline than 7.5% 2009, expected, given average employment growth of less than 125,000 per month.

The key to this apparent paradox has been a decline in what is known as the labor force participation rate, which is defined as the number of people in the labor force (that is either working or actively looking for a job) as a percent of the civilian population, aged 16 and older."

 

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