The Misleading Unemployment Rate
The unemployment rate has recently dropped from 7.9% to 7.7% but this decrease is not as significant as people would like it to be. Though approximately 236,000 jobs have been added the decrease in unemployment rate has been significantly impacted by a shrinking work force. People have either stopped looking for jobs after being discouraged or have gone into retirement; the smaller work force may be a big attribute to why the unemployment rate has dropped. A large amount of people born during the baby boom, are now reaching retirement age, so large retirement rates should be expected for the next few years. A recent budget cut made to cut military spending is expected to cut over one million jobs between 2013 and 2014. Although some jobs have been added recently, those new jobs will not be able to cover for the jobs lost during this budget cut.
The economy has been giving false indicators of a road to recovery, but all these indicators such as the unemployment rate and the Dow Jones Index do not take into account the bigger picture. These numbers reflect what is going on now, but does little to reflect how our economy is doing as a whole. As opposed to getting their hopes up, the government should continue to think of ways to improve our economy.
Written By: Jessica Ho
Source: The Wall Street Journal