The Labor Force Adjusted Unemployment Rate is Still 10%


Fed Chair Jerome Powell proposed a methodology that factored in labor force declines due to Covid. I replicate the idea.

Powell Calculation

An Economists Asked me How Did Powell

I discussed Powell's adjusted unemployment rate on March 2, in How Did the Fed Conclude the Real Unemployment Rate Was 10% in January?

As you can see, I came up with nearly the same chart via the methodology described in the above link.

Private Payroll Rise a Whopping 465,000

Earlier today I noted Private Payroll Rise a Whopping 465,000

The BLS put the official unemployment rate at 6.2% whereas the labor-force adjusted unemployment rate is 10.0%.

Labor Force and Projected Labor Force

Labor Force and Projected Labor Force 2021-02

The Wall Street Journal comments Better Job Market Not Nearly Good Enough for the Fed.

Given Powell's repeated comments regarding the labor force, I certainly agree.

By my calculation, the labor force is 5.8 million below the number Powell seeks, and 4.2 million below the February 2020 pre-Covid labor force of 164.4 million.

The labor force is a moving target. It has been on a steady increase at the same average monthly rate since the beginning of 2016. 

I believe Powell used a similar methodology or the charts would not align as much as they do. 

Fed Hubris

Although I agree with Powell that the unemployment rate is hugely understated, I disagree strongly with the Fed's approach to deal with it.

For discussion, please see Fed Hubris: Housing Prices Show the Fed is Making the Same Inflation Mistake


Comments (5)
No. 1-4

Finally we see people who were part of the Trump admin were actually the rioters. It will be interesting to see the chain of command called to testify soon and see why they did not call the national guard.


Not that I think you will take this as a compliment Mish, but Janet Yellen just said the same thing on the PBS Newshour about 15 minutes ago. So, is this a case of her being like a stopped clock; right twice a day? Or, is it back to the math lab for you to find your error, because the idea that you would agree with anything Yellen says is sort of really funny.


I kept reading about how there was an exodus from California but I noticed traffic was as bad it has ever been when I would drive around the bay area last year. Now I know why. In San Francisco proper i noticed less traffic and fewer people. Now the data backs up what I observed.

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