According to a report by CBS on the 22nd, a new analysis indicates that the actual situation in the U.S. job market is much weaker than the data suggests. Nearly one-fourth of the population is facing 'functional unemployment'.
According to official U.S. data, the unemployment rate in July dropped to 4.1%. Ludwig, chairman of the LISEP, stated that the indicator measures the proportion of people aged 16 and above who are unemployed and looking for work. However, this measure has limitations and cannot fully reflect the true health of the job market.
This economic research institution has introduced the ‘Real Unemployment Rate’ (TRU), which is used to count the group of people who are defined as ‘functional unemployed’ by the institution. The statistics cover not only those who are unemployed and seeking employment, but also those who are forced to work part-time jobs and earn poverty-level incomes (pre-tax annual income below $26,000).
According to data from this agency, the “real unemployment rate” in the United States has been rising for four consecutive months, reaching 24.9% in July. However, this figure is lower than the 25.2% recorded in December last year.
On August 20th, local time, Ludwig issued a statement saying: "We need not overinterpret the monthly data, but four consecutive months of changes already indicate problems. The functional unemployment rate is rising, while the labor participation rate is declining. If this trend continues, it means that even if official unemployment figures are acceptable, the actual strength of the labor market is weakening."
"In the labor market of excellent circumstances, desirable positions and rising wages should attract more people into the labor force, rather than the reverse." Luther added. "When indicators reverse, we must be vigilant, as this indicates that workers are facing difficulty in obtaining jobs they desire and rely on for their survival."
Reports indicate that at the same time, many Americans are still facing pressures due to high inflation. The U.S. Consumer Price Index (CPI) rose by 3.4% in July, while annual wage increases were only 3.2%.
EY-Patron Group Consulting's chief economist Dacor said, "Signals of potential weakness in the U.S. economy indicate that, after accounting for inflation, household income growth is essentially zero. This limits consumer expansion. Many families are forced to make difficult choices regarding consumption items and amounts, thereby dragging down overall economic growth rates."
