In a recent Bloomberg article, economists from Goldman Sachs have predicted that unemployment in the US will drop from it’s current rate of 5.1% to 4.5% in 2018 – however the predicted shift is not necessarily an indicator of a stronger US economy; but rather a shrinking of the number of people who are either employed or are actively looking for work.
The workforce “participation rate” in the US has consistently dropped for the past 15 years – from over 67% in October 2000 to 62.4% in September 2015. This trend, according to Goldman Sachs, could be indicative of an institutional change within the overall workforce dynamics – meaning that unemployment rates are lower because it is less likely that people who are out of the labor will come back in.
Scott Wolf, CEO of Grace Century comments on some recent macroeconomic reports relating to employment participation ?Does 4.5% unemployment mean ?boom time? in the U.S.? If you look at this article . you will realize why it doesn?t. We are starting to reassess our assessment of Interest rate direction. The answer might be a prolonged sideways.?