top of page
  • control884

Unemployment hidden secret

One of the most important indicators the Fed is following is unemployment. Despite the fact that rates have increased over the last 18 months and some companies have announced significant layoffs, U.S. unemployment has been resiliently low. In the chart below we can find a potential explanation for the low unemployment: within active population, the base used to calculate who is employable, there has been a big spike in number of retirees vs expectations. This phenomenon reduces the size of the denominator in the employment equation (people working/ people available to work) and as a consequence, even in the case of a reduction in the working population, through layoffs for example, the unemployment may not change or move very little. The question is, how long can the US economy depend on early retirees, and more importantly, should the Fed base its decision not to cut on an indicator that is temporarily distorted.

Want to know more? join Fund@mental here

6 views0 comments

Recent Posts

See All


bottom of page