The unemployment rate unexpectedly declined this month, even as U.S. payrolls expanded at a slower pace than most economists had forecast.
Unfortunately, the decline was due to a sharp drop in the labour participation rate (fewer people looking for jobs), which isn’t good news.
Nonetheless, the 8.1 per cent figure is a welcome rate for the Obama administration, because it looks like unemployment is finally heading in the right direction (down).
It’s worth noting, however, that the unemployment rate is still strikingly higher than the Obama administration thought it would be by now, especially after the economic stimulus enacted back in 2009.
In 2009, advisers to President Obama projected that the unemployment rate would be close to 5 per cent at this time.
This highlights one of the biggest mistakes the Obama administration has made in the President’s first term — underestimating the depths of the economic decline and then being over-optimistic about the recovery rate.
Below, a look at the current unemployment rate (green) compared to projections made in 2009.
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