Obama Fan Ezra Klein Says, Almost The Entire Decrease In Unemployment is Because People Have Just Given Up

Don't talk to me about numbers, I'm focused on the long run ...

Even Obama's bestest fans forever are giving up on him.

From WaPo:

For most of his presidency, President Obama has been focused on the economic short run — which makes sense, given that he took office in the midst of the biggest recession since the 1930s. With his big economic speech today, he’s shifting to the long-run, talking about the structural changes he thinks the economy needs to see for the U.S. to prosper going forward.

But anyone who thinks that the short-run battle is over should take a look at a new report by Daniel Alpert over at the Century Foundation. Alpert notes that while the headline unemployment number is well below its recession-era peak, that’s almost 100 percent due to declines in the labor force participation rate — that is, the share of the population that’s either employed or actively looking for work. Don’t believe him? Take a look at this chart [seen above].

The dotted red line is the U-3 unemployment rate, or the number you see everywhere. It can go down for one of two reasons: either more people are working, or fewer people are in the labor force. So which is it?

You see that solid blue line? That’s the employment/population ratio, or the number of employed people divided by the civilian noninstitutional population (aka everyone over 16 who’s not in prison, a mental institution, the military, or a nursing home). It’s barely changed since the nadir of the recession. The share of adults who are working isn’t going up; it’s stagnating. More people aren’t working.

Now, look at the blue dotted line. That’s the labor force participation rate. See how it nearly perfectly tracks the movements of the unemployment rate? That’s a pretty good sign that people leaving the labor force, rather than getting jobs, is what’s driving the latter down.

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