In his latest post regarding the latest unemployment claims number, Sumner asks why the ratio of claims to population is the same as it was during the 2006-2007 “boom” period.

I don’t see the mystery given that we have the smallest LFPR since 1979 and an economy that has been stable at very low growth for the last three years: much less employment, less claims against a larger population than in 2006-2007. We are not growing enough to reemploy everyone who wants to work and to keep up with the population growth with net new jobs consistently in the low to mid 100k area. In fact, with a robust recovery, I would expect the ratio of unemployment claims to population to go even lower before leveling off as people are being sucked off their couches after having been on extended hiatus.

If anything, this number confirms that we are only very slowly reversing negative medium term trends. Perhaps by the time I am ready for retirement, the Fed might have finally met its full employment mandate, even if only by way of natural wage adjustments.

Advertisements