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March 11, 2008

Shrinking Labor Force in the US

A report released on March 7 by the Labor Department showed that job cuts continued in February for the second straight month. This month’s loss, the biggest in five years, has cost 63,000 their jobs.

Funnily enough, the unemployment rate dropped to 4.8% from 4.9%, which clearly shows that the labor force is shrinking, as people are being forced to give up even looking for a new job!

All this happen, despite the fact that the Fed has lowered its target for the federal funds rate 5 times already since September. The most recent rate cut was on January 30, with rates standing at only 3%. The Fed’s recent moves include the central bank’s first rate cut since 2001.

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