"An unemployed court jester is nobody's fool."
Last week the Bureau of Labor Statistics reported that in December the unemployment rate in the U.S. fell to just 5.6%. The number of Americans that were counted as unemployed fell by 383,000 from the previous month. That sounds like very good news, but it's not the whole story. The population that was in the labor force (working or not working) fell by 273,000 during the same month. That essentially means that 273,000 people decided for whatever reason to leave the labor force and were no longer interested in working. Perhaps they were discouraged by their employment prospects, maybe they wanted to retire, go back to school, or play video games in the basement full-time. But during December three out of four people who left the ranks of the unemployed didn't do so because they found a job, but because they decided they didn't want to work.
David A. Pace, CFA
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