Understated Unemployment

Currently, the unemployment rate is 3.7%, up from 3.5% in July. While 3.5% equaled the 2/20 pre-covid low and is the lowest unemployment rate since 11/69, when we were in Vietnam, it dramatically understates labor market tightness. In 2/20, when the unemployment rate was 3.5% there were 1.22 job openings per unemployed person, today that number is 1.98! That’s largely why wages are rising quickly today but didn’t in 2020.