Measurement Matters

While GDP will return to its pre-pandemic level in 21Q3, absent expansionary fiscal policy the labor market will take until 2024. Correcting for worker misclassification by the BLS boosts the reported unemployment rate from 6.1% to 6.9%. Correcting for the sharp labor force participation rate decline unique to this recession further raises it, depending on the assumptions, to between 8.3% to 9.3%, near the Housing Bust peak of 10%