By now, we all know that the rate of unemployment in the U.S. is skewed by the fact that fewer people are in the workforce. So the 7.6% will look good for headlines over the weekend, but the fact is that the big miss on jobs added (88,000 vs. 190,000) is going to be more important to investors over the next few weeks.
With some of the recent economic reports showing deterioration, the earnings season will open next week with a gray cloud hanging overhead.
As we wrote about yesterday, the ADP payrolls report has been tracking the BLS pretty well lately.
Again, take a look at the recent trend for the labor participation rate – it is clear why the unemployment rate is dropping.
Since 2009 more than a 2% drop – equates to somewhere around 500,000 fewer people in the workforce.