ABSTRACT
In 2013, when the unemployment rate fell from 7.7 percent in February to 7.6 percent in April, one might think that this was good news for the U.S. economy. It was not. The problem with this indicator is that the unemployment rate is a ratio that contains a numerator (the number of people working) and a denominator (the number of people looking for work), and the entire change in this case was attributable to the denominator. A vast number of people had stopped looking for work. In fact, in one month alone, roughly 1.5 million unemployed Americans gave up looking for a job despite the fact that the economy showed signs of improvement and the stock market reached an all-time high.
