Contact

A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

All Reports

 
Oct 05 2018

Not Your Grandpa’s Jobless Rate

The full version of this report was released to ECRI clients on Jun 20, 2018 -

The overall jobless rate is now the lowest in nearly half a century, but most don’t understand why. For college graduates, it’s the lowest in only 11 years, so the headline number exaggerates how tight the labor market is for them.



Today, over 34% of Americans are college graduates, more than triple their population share in 1969. Meanwhile, those without high school diplomas – who made up almost half the population in 1969 – are down to only a tenth of the population.

Because the jobless rate for college graduates is structurally much lower than for those who aren’t high school graduates – the difference typically being several percentage points – that pulls down the headline jobless rate, even though the job market for college graduates isn’t as tight as it was in the summer of 2006.

That’s notable because, while their wage share was already a quarter in 1969, it’s well over half today. But for those without high school diplomas, it’s under 4% now, so the huge plunge in their jobless rate since 2010 makes less of a difference to consumer spending.

Of course, it’s typical for the jobless rate to decline substantially in long expansions. But a key reason it’s so low today is the enormous increase in the proportion of college graduates over the decades.

Click here to review ECRI’s track record.

For more information on ECRI professional services please contact us.

Related News & Events

Is The U.S. Economy Slowing?

New York Post October 25, 2018

If the U.S. economy is slowing, who is going to be blamed? More

 

Economic Cycles & Stock Price Corrections

ECRI October 24, 2018

With at least one equity price correction during every economic slowdown, knowing where you are in the economic cycle is critical to managing portfolio risk. More

 

Damned Lies and Statistics

Mauldin Economics October 23, 2018

With GDP growth over 4% and the jobless rate under 4% people feel pretty good, but the last two times we saw this combination, in 2000 and way back in 1969, a recession was less than a year away. More

 

ECRI’s Inflation Downturn Call

Grant's October 16, 2018

Achuthan joined Grant’s podcast to discuss ECRI’s cyclical worldview on inflation, home prices, EM and more. More

 

Housing Market Is Raising Serious Red Flags

Bloomberg October 15, 2018

Real home price growth looks to have already entered a cyclical downturn that is likely to intensify as affordability worsens. More

 

Worst Home Price Outlook Since 2009

ECRI October 15, 2018

A home price downturn is much more than a possible risk. More