The unemployment rate ticked slightly down in September thanks in large part to more people leaving the workforce, an indicator of coming economic trouble, experts say.
Unemployment fell to 3.5% in September, down 0.2% from August, as 57,000 people left the labor force, edging participation down to 62.3% from 62.4% in August, according to data from the Bureau of Labor Statistics (BLS).
“While we love to see the former, the latter is a negative indicator,” said Heritage Foundation economist E.J. Antoni, speaking with the Daily Caller News Foundation. Antoni said the report indicates future job losses. (RELATED: Wages Took Their Worst Hit In 25 Years: REPORT)
“The unemployment rate fell to 3.5% largely because the labor force declined,” said Heather Long, economics columnist and Editorial Board member at The Washington Post, on Twitter Friday, bluntly characterizing the situation as “not good.”
Mohamed A. El-Erian, President of Queen’s College, Cambridge, and former chairman of President Barack Obama’s Global Development Council, indicated that the combination of these factors made it unlikely for the Federal Reserve to slow its aggressive interest rate hikes of 0.75%.
Combined with the addition of just 263,000 jobs in September, the weakest job growth of the calendar year, the overall proportion of the population that is at work held steady at 60.1%, according to the BLS. Both this measure and labor force participation are 1.1% lower than February 2020, which the BLS considers to be a pre-pandemic standard.
Just one month but not good to see prime-age labor force participation rate move down (to 82.7% vs. 82.8% prior) pic.twitter.com/ki8sjTJ7dm
— Liz Ann Sonders (@LizAnnSonders) October 7, 2022
After adjusting for inflation, average weekly earnings, which are up 5% on an unadjusted basis, were “flat,” Antoni said. Earnings adjusted for inflation, as measured by the BLS, have fallen 17 months in a row, since March 2021.
“Employment is a lagging indicator, meaning the economy changes direction before employment does. But employment gains have been falling since July, and businesses continue to indicate that they are reducing hiring as output continues outpacing new orders,” Antoni told the DCNF. “In the coming months, the job gains will evaporate, and then turn to losses.”
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