Saturday, May 19, 2018
Business

Unemployment is getting better, but many still feel we're in a recession

The economic narrative in November was more or less the same as it has been for the past several months: The United States added hundreds of thousands of jobs. Unemployment is at a relatively low 5 percent. Things look good enough that the Federal Reserve may well raise interest rates by year's end.

So why do so many people still feel like we're in a recession?

"There are a fair number of Americans who essentially listen to the banter surrounding some of these data releases and feel as though they are somehow disconnected from it," Mark Hamrick, senior economic analyst for Bankrate.com, said of the sometimes rosy analysis. "This isn't your father's 5 percent unemployment rate."

That's because the monthly unemployment rate doesn't tell the whole story, economists say. It measures how many Americans have looked for work in the past month but didn't land a job.

But it doesn't count the much larger group of underemployed Americans — that is, people who have gotten so discouraged they stopped looking for work, and people working part-time who still want full-time jobs.

The broader measure has stayed stubbornly high.

That helps explain the disconnect between economic data and Americans' perceptions. In October, for example, the national Consumer Confidence Index fell sharply as more people said their faith in the labor market was shaken. The unemployment rate, meanwhile, was virtually unchanged that month at 5 percent.

In November, the jobless rate held at 5 percent, according to figures released Friday. The underemployment rate was mostly unchanged at 9.9 percent.

The United States added 211,000 jobs, centered on construction, professional services like accounting and the health care industry, the Bureau of Labor Statistics said. Over the past year, the economy has added an average of 237,000 jobs a month.

Friday's strong unemployment report is widely thought to open the door for the Fed to start raising interest rates, which have been held at historic lows for years. Fed Chair Janet Yellen told Congress this week that improvements in the labor market would be key to the central bank's thinking when it meets this month.

Yellen said the Fed would raise rates gradually, but each increase will be felt by individual Americans. The rate hike will make it more expensive to take out a loan, and it could make for costlier credit card payments.

That's why the divide between what the headline economic data says and how Americans feel matters. Raising interest rates because the big picture looks good risks breeding resentment among those whose situation is not so good, Hamrick said.

"The risk is that people, as I say, listen to the banter or read the headlines and say, 'Wait a minute, that doesn't address my experience,' " Hamrick said.

A rolling average of the underemployment rate in Florida stood at 11.9 percent in the third quarter, according to federal data. (The Bureau of Labor Statistics only releases annual averages for the state every three months.) It has improved steadily since the recession, but compared with the standard unemployment rate, it has been relatively high throughout the recovery, said Sean Snaith, an economist at the University of Central Florida.

"The headline unemployment rate doesn't give us a very good picture this time around," Snaith said. "Things like the unemployment rate, they're at levels which historically were consistent with a healthy, robust economy and labor market. But this time around, it's not the case."

Still, there is good news for Florida's economy. Job growth is outpacing the rest of the country, and consumer confidence here got a boost last month as Floridians reported feeling better about their finances.

That owes largely to the rough downturn Florida went through, Snaith said. The state is catching up after it was hit harder than the rest of the country, and the recession dragged on for years, even as the national economy started its rebound.

"I still think there's some room to go in Florida, but fortunately, we seem to have the momentum on our side," Snaith said.

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