Tuesday, July 01, 2014

Low or high?

Just one overwrought indicator, but the monthly unemployment rate for Pittsburgh in May has been released. The headline I guess will be that it is down 1/10th over the month to 5.5%. I'll add that the Pittsburgh MSA is now 91 months below the national unemployment rate FWIW.

But not to repeat my relative unemployment chart, which looks much the same, how about this.  Another headline bullet point may be that the regional unemployment rate is now down to its lowest rate since October 2008, or over 5 and a half hears ago. Also FWIW.

But what is low? Economists have been debating how low unemployment rates can go and be sustained since forever without the greatest of conclusions. Much of that debate looks at sustainable national unemployment rates. Much less debate looks at how low regional rates in any one area can stay.  Certainly through the 1990s, areas like Charlotte maintained sub 3% unemployment rates for extended periods. For the record, I believe the lowest unemployment rate ever recorded for the Pittsburgh metropolitan area as then defined was 2.3% in November 1966.

For Pittsburgh below is the distribution of monthly unemployment rates in Pittsburgh since 1970 highlighting the current data.  For reference the median monthly unemployment rate over that time has been 6.2% and the average monthly unemployment rate (really pushed up by the long tail miasma of the 1980s) is over 6.6%. Note that at 5.5% we are at the bottom end of the range for the group highlighted.


Anonymous BrianTH said...

As the unemployed count is dropping, the labor force count is also dropping (albeit not by as much, since the employment count is now back to increasing again). I am wondering if this is still at least in part the result of an unwinding of the possible misattribution of the state's unemployed that we have previously discussed.

Anyway--I probably won't be worried about the unemployment rate as long as it stabilizes somewhere in the 4-5% range.

Tuesday, July 01, 2014 10:33:00 AM  

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