Output gappers like to use the unemployment rate as a proxy for the degree of slack in the economy. In the last two months, the civilian unemployment rate plummeted from 9.8 percent to 9 percent. While payroll growth, derived from a separate survey of businesses, was tepid, history suggests such steep falls aren’t a drop in the bucket.
Large month-to-month declines in the unemployment rate are rare and “usually signal the start of a very strong upturn in growth,” says Joe Carson, director of economic research at AllianceBernstein in New York.
Case Studies
That was the case in 1954, 1958, 1961 and 1983, when big declines in the unemployment rate -- the result of either workers dropping out of the labor force or new hiring -- turned out to be the start of a trend, he says.
http://www.bloomberg.com/news/2011-02-1 ... -baum.html
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