In last month’s edition of Labor Market Watch, I made the argument that the unemployment rate was a very useful (albeit not perfect) indicator of labor market health:
This indicator, produced by an entirely different survey from nonfarm payroll employment, undergoes only minimal revisions over time, even if responses rates have been dropping. It’s relatively unaffected by the pace of population growth. And historically, it tends to be closely related to the state of the economy – moving slowly in normal times, surging very quickly during recessions.
I got some pushback from our readers, so I thought I’d use this month’s Labor Market Watch to elaborate on why I like the unemployment rate, imperfections and all.
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