Prospects for the U.S. Labor Market
Jonathan McCarthy and Simon Potter

The unemployment rate in the United States fell from 9.1 percent in the summer of 2011 to 8.3 percent in February. This decline, the largest six-month drop in the unemployment rate since 1984, has surprised many economic forecasters. The decline is even more surprising because recent real GDP growth appears to have been around trend at best, whereas in early 1984, growth was more than 7 percent. Our next six posts in Liberty Street Economics will discuss prospects for the U.S. labor market given this surprisingly quick decline in the unemployment rate. In this opening post, we outline some of the themes examined in this series and provide a brief summary of our conclusions. But first we develop a simple framework to place the unemployment rate in context with the rest of the labor market.