Just a few days ago, the number 6.7 was posted in many business news headlines and business journals. The reports are chock full of phrases like “lowest since 2008” and “why 6.7% is bad news.” It seems as though most of the media is communicating our need to be concerned over the latest hare-raising number released by the Bureau of Labor Statistics.
I’m one to be easily hyped and excitable, but these reports beg reasoning. Let’s start with why 6.7% seems to be a bad number for the United States economy. In December the unemployment rate fell to 6.7% which is the lowest it has been since the fall of 2008. Not so bad, right?…..wrong. The key reason behind this number is that the labor force participation has fallen meaning that people have stopped looking for work. (You know, that ugly phrase “discouraged workers”) Other bad news is that only 74,000 jobs were created in the US as compared to the average of approximately 212,000. These factors are ones that have analysts and economists rolling their eyes and sighing.
But…before we get too engrossed in the negative aspects of this newly released statistic, I found it is important to step back and look at the big picture. Though this snapshot is not the most appealing, it’s exactly just that; a snapshot. Instead of this 6.7 unemployment number being one to freak out about, it needs to be communicated that this may not be as dramatic as the business news makes it out to be and why this is so.
As stated before, it is crucial to shift our emphasis to the bigger picture. Combine the statistics for the year for a broader view and the economy is still at a healthy point. In fact, it’s better than it has been. The United States economy is expected to have expanded as much as 3.5% in 2013 versus the previously estimated 2%.
Another positive, yet very debatable point about this statistic I believe is that it may slow the Federal Reserve’s tapering. The Fed has planned to reduce the amount invested in stimulus from $85 billion to $75 billion. The tapering for consumers may mean that interest rates on mortgages and students loans and whatnot will increase. The Fed’s continuation down the road of the taper process is data dependent. If the gloomy numbers continue to be released consistently, it may end or slow the tapering of the stimulus investment.
But tapering or not, I’ll have to side with Aesop on this one and agree that slow and steady wins the race. An important strategy is not to engross ourselves in the gloomy snapshots, but in the big picture. So I’ll choose to see this “hare”-raising statistic as another step (shaky, but still a step) on the road to recovery.