The Most Important Number of the Week Is 66.7
It’s probably better to watch what consumers are doing rather than how many people are working to determine where the economy and markets are headed.
Where is the economy headed? Watch consumers, not the job market.
Photographer: Emily Elconin/Bloomberg
Economists are generally a “glass half empty” bunch. So while they cheered the U.S. Labor Department’s monthly jobs report on Friday, which showed the unemployment rate dipping to a pandemic-era low of 4.6%, they also bemoaned a labor force participation rate that has become stuck at around 61.6% since the summer of 2020. Before the pandemic, it was more like 63.5%. That may not seem like much of a difference, but it accounts for the 5 million or so jobs that have yet to return.
The thinking is that the economy won’t be able to meet its full potential until those workers who are still on the sidelines decide to seek employment. The economists at Wells Fargo & Co. went so far as to write in a report that the lack of improvement in the labor force participation rate may give the Federal Reserve “pause as it considers the strength of the overall labor market recovery.”