For the week ending in December 27, state jobless claim figures in the US rose unexpectedly. Initial filings for state unemployment assistance went up 17,000. This puts the total seasonally adjusted unemployment assistance filings at 298,000 people. This mild rise in unemployment figures comes as a surprise. After all, the US has been on a hiring streak recently as the official unemployment rate dipped below 6 percent after so many years. The current unemployment rate stands at 5.7 percent. This is a big deal because the US economy hasn’t been this healthy, in terms of employment levels, since pre-financial crash 2008. Indeed, for the past four weeks, there has been a steady decline in unemployment assistance filings. Taken broadly, the US has seen unemployment filings below 300,000 for the past sixteen weeks. Quite a comforting trend given the massive layoffs Americans have been getting used to in the wake of 2008.
While a lot of financial news pundits and observers of the US economy find the recent downtrend in the US’ official unemployment rate encouraging, there is an 800-pound statistical gorilla in the room that people should realize. Hanging over otherwise rosy employment figures is the fact that US labor participation has been declining. In fact, US labor participation rate is at 36 year lows. 36 years! That’s a huge number of people who have decided to not work at all. Add to this figure the fact that food stamp assistance as well as welfare rolls have been on the rise in the US and you can see that the economic ‘recovery’ stands on very wobbly legs. Moreover, a lot of the job gains economic observers have been excited about are actually service jobs which tend to pay lower. Sure, a 5.7 percent unemployment rate might be exciting but if you look closer, things aren’t what they appear to be as far as the real state of American employment levels’ health.