Employment Population Ratio & Recessions
Directly on point with our last post on NILFs and the labor participation rate, David points us to this delicious econ-wonk chart (below).
It shows the relationship between a declining Employment Population Ratio, and subsequent recessions:
Fascinating chart -- thanks for the pointer, Dave, and thanks Adam for the chart!
>
Source:
EM-Ratio -- What, Me Worry?
Adam Oliensis
Safe haven, September 09, 2007
http://www.safehaven.com/article-8380.htm
Tuesday, September 11, 2007 | 10:30 AM | Permalink
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Well, that graph seems to suggest that the ratio is predictive of recessions. But isn't this mixing up cause and effect, that recessions result in a smaller ratio of the workforce employed? Notice that the declines are coincident with recession, not typically leading recessions. I think it basically tells us something we already knew, that unemployment goes up during economic downturns.
Posted by: Tom | Sep 11, 2007 10:36:57 AM
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