I am encouraged by the accelerating pace of new jobs added in January. The 8.3% unemployment rate is artificially low, though, given the labor force participation rate declined to a level unseen since March 1983 (63.7% of the civilian labor force 16 years of age or older) [Note 1)]. People appear to be pulling themselves out of the job market as seen in the participation rate and U-6, the seasonally adjusted underemployment rate [Note 2)]. U-6 remains high, but declined to 15.1% from 15.2% last month (without seasonal adjustments it increased to 16.2% from December's 15.2%, but is 1.1% less than a year ago). I do not know how much we see is simply the result of demographic changes caused by the retirements of increasingly more baby-boomers. We need to be careful how much we read into the numbers. I do not think the health of our economy is as good or bad as painted in this election year.
Notes
1) There had been a relatively steady increase in labor force participation from the Kennedy through Clinton administrations, initially driven by increasing numbers of women joining the formal labor force. The trend reversed by the first term of the George W. Bush administration, stabilized and improved slightly during most of his second administration. Participation has been declining throughout the Obama administration.
2) Defined as the total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.
