Nonfarm payroll employment fell by 240,000 in October, and the unemployment rate rose from 6.1 to 6.5 percent
While a 240 thousand drop in just one month for the payroll survey measure of employment is quite significant, how on earth did the unemployment rate increase this much? Only a small part of the story comes from the labor force participation rate, which rose from 66.0% to 66.1%. The household survey shows that measured employment dropped by 297 thousand, which lowered the employment-population ratio from 62.0% to 61.8%. This compares to an employment-population ratio of 63.4% as of December 2006 and an employment-population ratio of 64.4% as of December 2000. The need for aggregate demand stimulus is clear and it is good to see that President-elect Obama is quickly assembling his economic team.