The number of Americans who aren't employed but aren't considered unemployed because they are not looking for a job skyrocketed to 103 million in April and still accounts for more than a quarter of the U.S. population.
Why it matters: The official unemployment rate has halved in recent months (to 7.9% in September from 14.7% in April) but the number of Americans out of the labor force has not fallen with it, and, in fact, rose in September back to nearly 101 million.
Between the lines: As Fed chair Jerome Powell noted in remarks to the National Association for Business Economics last week...
- “A broader measure that better captures current labor market conditions — by adjusting for mistaken characterizations of job status, and for the decline in labor force participation since February — is running around 11%.”
The big picture: During the Great Recession the number of people not in the labor force increased by an average of 0.12%, or 96,000 people, per month, according to an Axios analysis.
- During the month of April, the number increased by 7% and remains 6% higher than it was in March — an average of 713,000 people removed from the labor force each month.
The bottom line: The pandemic "has resulted in millions of workers falling through the cracks of the BLS methods and definitions," says Lou Brien, rates strategist at DRW Trading, in a note to clients.
- "Therefore, millions of people exist in an employment statistics Neverland, where the bad news doesn’t seem quite as bad because of unusual circumstances created by the pandemic."