zaterdag 7 december 2013

Labor Force Participation Rate Vs. Unemployment Rate

We all know the Unemployment Rate is rigged by the U.S. government. A much better indicator is the Labor Force Participation Rate. Historically, we see a negative correlation between the Labor Force Participation Rate and the Unemployment Rate.

Whenever the LFPR goes up (blue chart), we see a decline in the unemployment rate (red chart) and vice versa. This correlation has been true until 2008, where the U.S. government falsified the unemployment numbers and added hedonic adjustments. The red line should be going upwards since 2010 if we include discouraged workers, part-time workers, disabled workers, etc...

So, the key is to look at the labor force participation rate.

More info here. Labor force participation rate = green circle divided by yellow circle = amount of people who are working or seeking for work

For more information, here is a chart with a longer time frame of the labor force participation rate for the working age population (25 - 54 years).

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