The unemployment rate fell again in January, now at 6.6 percent. It’s down from 7.9 percent a year ago and from 10 percent in October 2009.
This would seem to be good news, but we’re uncomfortable. The expansion since the recession has been weak. The economy is not nearly where we want it to be. Just possibly, though, the drop in the unemployment rate in January was a sign of a stronger expansion.
The unemployment rate is a ratio, and interpreting ratios can be tricky. The unemployment rate is the number of unemployed people divided by the number of people in the labor force, times 100 to make it a percentage. What’s so tricky about that? Sometimes the unemployment rate falls even when the economy is losing jobs. It’s happened in five months since the expansion began.