“Want A Job Now” Still Hasn’t Turned
In early December I wrote about an indicator I have been watching to see when a bona fide turn in the underlying employment situation has occurred. It measures the number of people who are not in the labor force but who nonetheless want a job. This is sort of a “supply overhang” in the labor market, and that overhang is still causing a hangover. As the chart below (Source: Bureau of Labor Statistics) shows, the industrial reserve army of the unemployed is still growing.
Not In Labor Force, Want A Job Now
This will keep the Unemployment Rate elevated in the same way that the supply overhang in housing will keep prices from rising very much: as the situation starts to improve, this shadow supply will come on the market, joining the labor force initially as unemployed people.
Labor is a lagging indicator, we have been told a hundred times. But the Fed cares about the Unemployment Rate – so this continues to push off the date of first tightening.
