Economics
Parsing the Fed's Labor Participation Puzzle
- The job market looks hot, but participation rate is confusing
- It should fall. Instead, it’s flat overall and prime-age is up
The Marriner S. Eccles Federal Reserve building stands in Washington, D.C.
Photographer: Andrew Harrer/BloombergThis article is for subscribers only.
In the 2000 film Miss Congeniality, the beauty pageant contestant from Rhode Island is asked to describe her perfect date. She answers that it’s April 25 “because it’s not too hot, not too cold.”
Call this America’s April 25 economy (Federal Reserve presidents prefer “Goldilocks,” but variety is the spice of life). Unemployment is close to a 50-year low, wages are finally kicking higher, and inflation is contained right around the central bank’s 2 percent goal. Fed officials can put on a light jacket and take a victory lap, though one big point of confusion lingers: the participation rate.