unemployment rate

Should the Decline in Jobs Growth Be a Concern?

September 9, 2014

Last Friday, the Labor Department released the jobs report for August. This widely followed monthly report contains both the unemployment rate and the number of nonfarm jobs created during the prior month. Analysts expected a drop in the unemployment rate from 6.2% to 6.1% and they got it. The drop was mainly due to a decrease in the labor participation rate, which has been trending lower as more and more boomers reach retirement age.

For the jobs reports, analysts were way off with their forecast. Analysts were expecting 230,000 new jobs, but only 142,000 new jobs were created. The stock market actually went up following the news because investors viewed slowing jobs growth as a reason that the Federal Reserve would delay interest rate increases. (more…)

Earnings Season Preview

January 14, 2014

While 2013 is over, a lot of data for the past year is still flowing in. Last Friday, investors were fairly surprised by a jobs report that showed the unemployment rate drop handily from 7% to 6.7%. Yet monthly job gains were only 74,000, the weakest of 2013. On the surface, this makes little sense. Digging deeper, we find that the big drop in the unemployment rate was mostly due to people dropping out of the labor force. As a reminder, if you are not in the labor force—students, retirees, etc.—you are not considered unemployed. According to the Bureau of Labor Statistics (BLS), a lot of people dropped out in December. (more…)